COOPERATION 

A  STUDY  IN  CONSTRUCTIVE  ECONOMIC 
REFORM 


BY 

GORDON  S.  WATKINS 

Associate  Professor  of  Economics 
University  uf  Illinois 


7 


183i] 


CONTENTS 

PAGES 

The  Meaning  of  Cooperation 5-    6 

Conditions  Out  of  Which  Cooperation  Develops 6-    7 

The  Forms  of  Cooperations 7-    8 

Distinguishing    Characteristics    of    Workingmen 's    Co- 
operation       8-  11 

The  Development  of  Cooperation  in  the  United  Kingdom  11-  36 

The  Cooperative  Movement  in  the  United  States 36-  50 

Consumers'    Cooperative    Wholesale    Societies    in    the 

United  States 50-  65 

Summary  of  the  Recent  Growth  of  Cooperation  in  Other 

■Countries 65-  78 

Conclusion 78-  81 

Bibliography 82-83 

Index 84-  85 


4f*  ■«j 
-  U  Q  1. 


\M'bZ 


PREFACE 

The  period  of  price  inflation  incident  to  the  World  War  has 
aroused  a  deep  and  widespread  interest  in  the  subject  of  co- 
operation and  has  stimulated  the  growth  of  cooperative  move- 
ments throughout  the  world.  So  many  requests  for  information 
were  received  by  the  University  of  Illinois  that  it  was  deemed 
expedient  to  prepare  a  brief  study  of  the  development  and  con- 
temporaiy  status  of  the  cooperative  movement  in  various  coun- 
tries, especially  in  the  United  Kingdom  and  the  United  States. 

Space  did  not  permit  an  exhaustive  study  either  of  the  his- 
torical or  the  contemporary  aspects  of  the  cooperative  movement 
in  the  several  countries.  The  major  portion  of  the  study,  there- 
fore, deals  with  distributive  cooperation.  In  order  to  give  to 
those  who  are  especially  interested  in  this  phase  of  cooperation  a 
general  idea  of  its  growth  and  present  status,  a  great  deal  of 
statistical  information  has  been  assembled  and  presented.  In 
interpreting  these  data  it  is  necessary  to  remember  that  the  enor- 
mous increases  in  the  value  of  turnover  in  recent  years  have 
more  often  been  the  result  of  the  general  inflation  of  prices  than 
of  increased  production  and  distribution  of  goods.  Moreover,  it 
should  be  noted  that  conversions  of  foreign  money  values  into 
American  dollars  have  been  made  at  par  or  at  a  figure  approxi- 
mating par. 

The  author  wishes  to  take  this  opportunity  of  expressing  his 
appreciation  of  the  valuable  services  of  his  colleague,  Dr.  Ivan 
Wright,  who  read  the  manuscript  and  made  very  helpful 
criticisms. 

Gordon  S.  Watkins. 


COOPERATIVE  ENTERPRISE 
A  Study  in  Constructive  Economic  Reform 

During  the  years  intervening  between  the  outbreak  of  the 
"World  War  in  1914  and  the  present,  our  attention  has  been 
focused  so  intensively  upon  the  unprecedented  events  incident 
to  the  great  conflict  that  the  peaceful  elements  and  constructive 
forces  in  our  economic  life  have  developed  and  functioned  prac- 
tically unnoticed.  Among  these  constructive  movements  coopera- 
tion has  assumed  a  position  of  first  importance.  The  recent 
growth  of  cooperation  has  been  phenomenal.  There  is  scarcely 
a  nation  in  which  cooperative  enterprises  have  not  made  unusual 
records  in  the  production  and  distribution  of  goods  during  the 
last  six  years  of  world-wide  readjustments.  This  significant 
growth  has  revived  the  interest  of  the  general  public  in  a  move- 
ment which  is  founded  upon  a  principle  of  economic  activity 
diametrically  opposed  to  the  commonly  accepted  idea  of 
competition. 

The  development  and  present  status  of  the  cooperative  move- 
ment should  command  thoughtful  consideration  for  several  rea- 
sons. First,  it  manifests  the  practical  possibilities  of  the  funda- 
mental principle  upon  which  all  such  reformist  schemes  are 
established — the  principle  of  mutual  interest  and  cooperation; 
second,  it  reveals  the  persistence  and  determination  of  wage- 
earners  to  improve  their  economic  status  by  controlling  agencies 
of  distribution ;  third,  it  demonstrates  the  wisdom  and  sanity  of 
peaceful,  constructive,  and  deliberate  action  in  the  solution  of  the 
serious  economic  problems  of  modern  civilization;  and,  fourth, 
it  proves  conclusively  that  workingmen  can  organize  and  operate 
successfully  business  enterprises. 

The  Meaning  of  Cooperation 

Cooperation  is  defined  as  an  organized,  usually  non-political 
attempt  on  the  part  of  an  association  of  persons  to  control  the 
production  and  distribution  of  commodities  for  the  satisfaction 
of  their  numerous  wants.    "It  is  devoted  to  the  principle  that 

5 


6  COOPERATION 

things  should  be  done  and  commodities  produced  for  use  rather 
than  for  exchange."^  The  basic  principles  of  cooperation  rec- 
ognize fully  the  necessity  and  importance  of  capital  in  the 
economic  organization  of  society,  and  the  wisdom  of  procuring 
for  the  common  people  the  advantages  of  the  production  and 
distribution  of  commodities  which  now  generally  accrue  to  the 
private  enterpriser.  In  one  or  another  of  its  various  forms 
cooperation  aims  to  eliminate  the  middleman,  the  employer,  and 
the  private  creditor,  and  to  substitute  for  these  the  collective 
ownership  and  control  of  affiliated  cooperators.  The  immediate 
purpose  of  cooperative  enterprise  is  the  reduction  of  the  cost 
of  living  by  a  system  of  exchange  which  dispenses  as  far  as 
possible  with  the  services  and  profits  of  private  enterprise  in 
production  and  distribution  of  goods,  the  provision  of  credit  and 
insurance,  and  the  construction  of  homes.  ''It  tends  to  sub- 
stitute for  the  present  system  of  private  profit  a  condition  of 
society  under  which  eveiy  need  of  life,  social  and  economic,  will 
be  supplied  by  the  united  effort  of  all. '  '^  This  statement  suggests 
the  ultimate  aim  of  the  cooperative  movement  which,  while  not 
so  generally  thought  of  and  appreciated  by  the  rank  and  file  of 
cooperators,  is  no  less  significant  in  the  minds  of  the  founders 
and  leaders  of  the  movement — ^the  development  of  a  cooperative 
commonwealth  organized  and  functioning  in  the  interest  of  the 
community  of  producers  and  consumers.  The  ultimate  purpose 
of  the  movement,  therefore,  is  revolutionary  in  the  sense  that  it 
seeks  a  reorganization  of  our  economic  society  both  in  its  struc- 
tural and  in  its  functional  aspects.  The  method  of  achieving  this 
purpose,  however,  is  evolutionary  and  peaceful.  The  movement 
is  essentially  economic,  and  becomes  political  only  when  parlia- 
mentary action  is  deemed  necessary  to  safeguard  the  interest  of 
the  societies. 

Conditions  Out  of  Which  Cooperation  Develops 
The  existence  of  private  profits  and  a  high  price  level  is  not 
the  only  condition  that  stimulates  the  development  of  coopera- 

"Jaraes  P.  Warbasse,  The  Destiny  of  the  Cooperative  Movement,  p.  1. 

^Florence  E.  Parker,  ' '  The  Cooperative  Movement  in  the  United  States, ' ' 
Monthly  Labor  Beview,  United  States  Bureau  of  Labor  Statistics,  March, 
1920,  p.   138. 


STUDY  IN   CONSTRUCTIVE  ECONOMIC   REFORM  7 

tive  enterprise.  No  less  important  is  the  fact  that  under  modem 
conditions  and  methods  of  production,  distribution  and  credit, 
the  amount  of  capital  required  to  organize  and  operate  a  busi- 
ness is  usually  so  large  that  it  is  very  difficult,  if  not  almost 
impossible,  for  the  average  wage-earner  or  salaried  man  to  engage 
in  independent  enterprise.  Cooperation  provides  a  medium 
through  which  the  modest  savings  of  these  classes  may  consolidate 
to  finance  the  production  and  distribution  of  goods  and  the  con- 
struction of  homes,  and  at  the  same  time  make  possible  the 
accumulation  of  additional  capital  to  finance  even  larger  scale 
operations.  As  the  economies  and  efficiencies  of  large  scale  pro- 
duction and  distribution  are  effected  the  cooperative  enterprise 
becomes  self-sustaining  and  self-perpetuating,  yielding  the  bene- 
fits of  business  to  those  who  patronize  and  support  it. 

The  Forms  of  Cooperation 

The  above  explanation  of  the  character  of  cooperation  sug- 
gests that  cooperation  in  its  functional  aspects  may  assume  one 
of  several  general  forms.  Generally  these  are  known  as  (1)  dis- 
tributive or  consumers '  cooperation,  or  the  sale  of  commodities  by 
an  association  of  persons  who  desire  to  eliminate  the  merchant 
middleman  and  his  profits,  thus  appropriating  for  the  consumers 
the  advantages  and  benefits  of  the  business;  (2)  producers' 
cooperation,  sometimes  referred  to  as  labor  copartnership,  which 
is  an  organization  of  individual  workingmen  who  seek  to  dis- 
pense with  the  private  employer  and  his  profits  and  to  secure  the 
benefits  of  the  enterprise  for  the  laborers  themselves;  (3)  co- 
operative credit,  which  consists  of  associations  of  individuals  who 
endeavor  to  obtain  the  advantages  of  collective  capital  and  credit 
by  eliminating  the  profits  of  the  private  financial  institution.  In 
addition  to  these  three  general  types  of  cooperation  two  other 
forms  have  assumed  sufficient  prominence  to  entitle  them  to 
separate  classification.  These  are  (4)  cooperative  insurance,  the 
purpose  of  which  is  to  dispense  with  the  private  insurance  com- 
pany and  its  profits,  and  to  secure  for  the  members  of  the  asso- 
ciation the  benefits  of  safe  and  reasonable  insurance;  (5)  co- 
operative construction,  comprising  an  association  of  persons,  such 
as  building  and  loan  societies,  \^o  endeavor  to  make  possible 


8  COOPERATION 

economical  construction  and  convenient  payment  in  the  building 
of  homes. 

This  classification  of  cooperation  according  to  functions  must 
not  be  interpreted  too  narrowly.  In  actual  practice  there  is  a 
great  deal  of  duplication  of  functions  and  overlapping  within 
the  same  society.  In  the  United  Kingdom,  Russia,  and  other 
countries  where  cooperation  has  assumed  an  important  role  in 
the  economic  life  of  the  people  many  consumers'  associations  own 
and  operate  factories;  producers'  societies  often  perform  the 
functions  of  consumers '  associations  by  distributing  commodities 
among  their  members ;  and  associations  organized  primarily  to 
provide  credit  actually  buy  and  sell  goods.  Insurance  and 
dwellings  are  also  frequently  provided  by  one  or  another  of  these 
general  types  of  cooperative  societies.  The  above  classification, 
however,  sei'ves  to  emphasize  the  main  purposes  and  functions 
for  which  each  type  of  society  was  originally  established.  Opera- 
tions in  addition  to  those  planned  originally  are  undertaken 
under  the  pressure  of  economic  necessity  and  where  these  opera- 
tions are  not  already  taken  care  of  by  other  types  of  cooperative 
organization. 

Distinguishing  Characteristics  of  Workingmen's 
Cooperative  Societies 

Cooperation  is  essentially  democratic  in  regard  to  ownership, 
methods  of  control  and  administration  of  the  enterprise  that  is 
undertaken.  In  this  particular  cooperation  differs  from  profit- 
sharing  schemes  with  which  it  is  sometimes  confused.  Profit- 
sharing  plans  are  fundamentally  paternalistic  both  in  origin  and 
in  administration,  and  distribute  profits  primarily  for  the  pur- 
pose of  increasing  efficiency.  It  should  be  noted  also  that  profit- 
sharing  accepts  the  present  industrial  system  as  the  final  stage 
in  economic  evolution,  while  cooperation  aims  ultimately  to  re- 
j)lace  the  competitive  system  with  its  wage-payments  by  associa- 
tive production,  distribution,  and  credit.  Brief  examination  of 
the  distinguishing  characteristics  of  true  cooperation  will  suffice 
to  reveal  its  democratic  aspects. 

1.  In  Their  Organization  and  Constituency  Cooperative  So- 
cieties are  Inclusive.  Membership  is  open  to  all  who  desire  to 
affiliate  with  the  association,  except  that  the  administrative  com- 


STUDY  IN   CONSTRUCTIVE  ECONOMIC   REFORM  9 

mittee  is  usually  given  authority  to  deny  admission  to  any  per- 
sons regarded  as  undesirable  and  likely  to  injure  the  society. 
Apart  from  this  qualification  membership  becomes  the  privilege 
of  any  one  vs^ho  desires  to  purchase  shares  in  the  organization. 
For  this  reason,  cooperative  societies  are  in  no  sense  a  closed 
corporation  or  joint-stock  company. 

2.  Purchase  of  Shares  is  Easy  and  Convenient.  The  shares 
in  a  vsrorkingmen 's  cooperative  society  are  usually  of  small  de- 
nomination and  issued  at  par  value.  In  the  United  Kingdom 
the  value  of  a  share  is  commonly  £1.0.0.  (about  $5.00).  This 
denomination  is  most  common  in  the  United  States  also,  although 
here  $10  and  $20  shares  are  frequently  issued  or  each  member 
is  required  to  subscribe  for  ten  $5  shares.  Not  only  are  shares 
generally  so  small  as  to  come  within  reach  of  the  lowest  paid 
wage-earner,  but  provision  is  made  usually  for  payment  on  a 
weekly  or  quarterly  installment  plan,  or  even  by  the  automatic 
accumulation  of  dividends  which  accrue  to  the  holder  as  his  share 
in  the  profits  of  the  business.  This  plan  renders  cash  payments 
unnecessary  except  for  a  small  initial  amount  on  allotment  of 
shares.  The  steady  growth  of  the  cooperative  movement  is 
attributable  in  a  large  measure  to  this  unusually  convenient 
method  of  stock  purchasing. 

3.  Shares  are  Easily  Surrendered.  From  the  standpoint  of 
the  ease  with  which  one  may  enter  or  withdraw  from  the  enter- 
prise, the  cooperative  society  has  all  the  advantages  of  a  cor- 
poration and  none  of  the  disadvantages  of  a  partnership.  The 
major  portion  of  the  capital  of  a  cooperative  society  is  withdraw- 
able upon  comparatively  short  notice.  In  the  United  States  there 
is  considerable  variation  in  this  regard,  but  in  most  countries  the 
prevailing  practice  is  to  allow  members  to  liquidate  their  shares 
by  surrendering  them  to  the  society.  Sometimes  societies  re- 
quire each  member  to  hold  not  less  than  one  transferable  share, 
which  can  be  disposed  of  only  by  sale  to  someone  else.  The  ad- 
vantage of  this  requirement,  especially  in  the  case  of  the  small, 
struggling  society,  lies  in  the  fact  that  it  helps  to  sustain  the 
membership  and  to  perpetuate  the  society. 

4.  Democratic  Control  and  Administration  is  Guaranteed. 
In  all  true  cooperative  associations  the  principle  of  one-man- 
one-vote  obtains.    Almost  without  exception  societies  organized 


10  COOPERATION 

on  the  Kochdale  plan  allow  but  one  vote  to  each  member, .  irre- 
spective of  the  number  of  shares  held  by  him.  Where  share 
capital  is  owned  by  other  societies,  these  are  usually  given  addi- 
tional votes  in  proportion  to  the  amount  of  their  holdings.  Rigid 
adherence  to  the  principle  of  one  vote  for  each  member  regardless 
of  the  number  of  shares  owned  has  been  instrumental  in  pre- 
cluding that  concentration  of  stock  ownership  and  control  which 
so  frequently  has  deleterious  effects  upon  the  joint-stock  com- 
pany. In  cooperative  societies  voting  by  proxy  is  practically 
unknown.  Taken  together,  these  policies  assure  that  democracy 
in  administration  which  all  true  cooperative  schemes  are  deter- 
mined to  achieve  and  maintain. 

5.  The  Rate  of  Return  on  Share  Capital  is  Definitely  Fixed. 
There  is  a  fixed  return  on  share  capital,  which  in  most  cases  is 
limited  to  about  4  per  cent  or  5  per  cent  per  annum.  The  surplus 
profits  that  remain  after  the  payment  of  this  interest  are  usually 
distributed  in  certain  agreed  proportions.  In  some  cases  this 
surplus  is  divided  among  the  customers  of  the  association,  both 
members  and  non-members,  as  a  dividend  on  purchases,  while  in 
other  instances  it  is  distributed  among  shareholders,  customers, 
and  employees.  Agricultural  cooperative  societies  in  the  United 
Kingdom  divide  surplus  profits  among  customers,  employees, 
shareholders,  and  those  who  supply  raw  materials.  It  is  unusual 
for  the  shareholders  in  any  society  to  receive,  by  virtue  of  their 
holdings,  the  whole  of  the  profits. 

6.  Publicity  of  Accounts  is  a  General  Feature.  Much  of  the 
confidence  in  the  cooperative  movement  has  grown  out  of  the 
practice  of  publishing  at  frequent  intervals  all  of  the  accounts 
of  the  organizations,  and  the  open  and  frank  financial  policy 
adopted  by  the  societies.  Financial  statements  are  usually  de- 
tailed and  complete. 

7.  Trading  Not  Confined  to  Regular  Members.  The  privilege 
of  trading  at  cooperative  stores  is  not  confined  to  members, 
although  the  volume  of  sales  to  non-members  is  not  usually  very 
large.  This  may  be  attributed  to  the  ease  with  which  membership 
may  be  secured  and  to  the  fact  that  members  are  given  a  rate  of 
dividend  on  purchases  which  is  double  that  received  by  non- 
members. 


STUDY  IN  CONSTRUCTIVE  ECONOMIC   REFORM  11 

8.  Cooperative  Societies  Generally  Receive  Special  Legal 
Sanction.  In  countries  where  the  value  of  cooperative  societies 
is  fully  recognized,  special  provisions  have  been  made  for  their 
incorporation.  In  the  United  Kingdom,  for  example,  such  soci- 
eties are  incorporated  under  the  Friendly  Societies  Acts,  1896- 
1908,  and  the  Industrial  and  Provident  Societies  Act  of  1893, 
under  which  no  one  can  hold  more  than  £200  (about  $1,000)  in 
shares.  In  the  United  States  special  legal  provisions  are  made 
for  non-profit  seeking  corporations  and  associations. 

The  Development  op  Cooperation  in  the  United  Ejngdom 

The  United  Kingdom  is  commonly  referred  to  as  the  birth- 
place of  successful  cooperation  and  the  outstanding  example  of 
its  possibilities.  It  is  doubtful  if  there  is  a  more  interesting 
chapter  in  the  industrial  and  social  annals  of  Britain  than  the 
story  of  her  cooperative  enterprises.  The  movement  in  those 
islands  has  not  only  captured  the  imagination  of  the  idealistic 
social  reformer,  but  it  has  enlisted  the  unselfish  services  of 
practically-minded  men  who  see  in  such  enterprises  an  immediate 
aid  to  the  solution  of  the  serious  problems  of  distribution.  Both 
in  Great  Britain  and  in  Europe  cooperation  has  achieved  a  dig- 
nity and  degree  of  success  unknown  in  the  United  States. 

The  history  of  cooperation  in  the  United  Kingdom  may  be 
divided  conveniently  into  five  periods  as  follows :  (1)  The  period 
of  germination,  1825-1844;  (2)  the  period  of  reorganization, 
1844-1864;  (3)  the  period  of  integration,  1864-1884;  (4)  the 
period  of  expansion,  1884-1914;  (5)  the  period  of  political 
activity  and  supergrowth,  1914  to  the  present. 

1.  TJie  Period  of  Germination,  1825-1844.  Cooperation  in 
the  United  Kingdom  really  began  with  Robert  Owen  (1770-1857), 
a  preeminent  employer  and  one  of  the  greatest  captains  of  in- 
dustry in  his  day.  Although  Owen  is  referred  to  as  the  founder 
of  modern  collectivism  he  never  suggested  that  the  wage-earners 
expropriate  the  owners  of  capital,  but  rather  urged  them  to 
accumulate  their  own  capital  and  organize  their  own  business 
enterprise.  At  a  time  when  the  factory  system  was  destroying 
and  replacing  the  domestic  or  household  industries  and  the  work- 
ing class  was  suffering  tremendously  from  the  readjustments 
incident  to  the  Industrial  Revolution,  Robert  Owen  proposed  an 


12  COOPERATION 

industrial  commonwealth,  a  voluntary  association  of  individuals, 
coordinating  the  agencies  of  production  and  distribution  in  order 
that  they  may  function  in  the  interest  of  the  whole  community 
rather  than  for  the  benefit  of  a  few.  Numerous  social  experi- 
ments were  soon  made  in  an  attempt  to  achieve  this  ideal.  In 
1825  Owen  himself  organized  his  communistic  society  at  New 
Harmony,  Indiana,  and  his  followers  inaugurated  similar  colonies 
at  Orbiston,  near  Glasgow  (1825-1827),  Ralahine,  in  Ireland 
(1830-1833),  Monea  Fen,  Cambridgeshire  (1838),  and  Queens- 
wood,  Hampshire  (1839-1844),  not  forgetting  Owen's  famous  col- 
ony at  New  Lenark  (1813). 

In  this  early  stage  the  cooperative  movement  consisted  of  a 
series  of  productive  colonies,  commonly  referred  to  as  Utopias, 
such  as  those  already  mentioned.  Almost  contemporaneously 
with  these  Utopian  experiments  there  was  initiated  a  movement 
for  the  organization  of  cooperative  workshops  and  stores.  This 
movement  met  with  considerable  success,  as  may  be  seen  from 
the  fact  that  of  266  societies  organized  by  1830,  53  were  estab- 
lished in  the  last  quarter  of  that  year,  while  in  Manchester  alone 
there  were  16  distributive  stores  and  one  productive  workshop 
founded  between  1826  and  1830.  The  movement  gained  general 
prominence  in  the  decade  of  the  'thirties.^ 

Cooperation  assumed  something  of  a  national  character  when 
in  1834  Robert  Owen  organized  the  Grand  National  Consolidated 
Trade  Unions  for  the  dual  purpose  of  raising  the  wages  and 
shortening  the  hours  of  labor  and  organizing  cooperative  enter- 
prises on  a  prodigious  and  unprecedented  scale.  Within  a  few 
weeks  the  Union  had  enrolled  approximately  a  half-million  mem- 
bers, including  many  thousands  of  farm  laborers  and  female 
workers,  but  legal  opposition  and  an  organized  lockout  crushed 
the  young  association.  Moreover,  through  the  lack  of  a  solid 
financial  foundation  and  proper  business  methods  and  policies 
the  cooperative  stores  and  workshops  one  by  one  succumbed  to 
the  pressure  of  competition.  The  productive  colonies  were  sim- 
ilarly ill-fated,  and  the  first  phase  of  the  cooperative  movement — 
the  period  of  genesis  and  experimentation — ended  unsuccess- 
fully. 

'The  People's  Year  Book,  1919,  p.  113. 


STUDY  IN  CONSTRUCTIVE  ECONOMIC  REFORM  13 

2.  The  Period  of  Reorganization,  1844-1864.  The  early 
movement  expired,  much  to  the  satisfaction  of  its  derisive  critics, 
but  the  idea,  the  spirit  of  cooperation  was  as  tenacious  as  it  was 
new.  The  ideal  of  cooperative  enterprise  was  destined  soon  to  be 
given  more  definite,  practical,  and  virile  expression  by  the  Roch- 
dale pioneers.  A  task  of  no  mean  magnitude  awaited  the  prac- 
tical genius  of  the  twenty-eight  poor  flannel  weavers  of  the  town 
of  Rochdale,  near  the  industrial  city  of  Manchester.  Legal  and 
financial  difficulties  had  defeated  their  predecessors,  and  a  jeer- 
ing public  prophesied  the  early  demise  of  the  new  movement. 
The  problem  that  challenged  the  persistent  courage  of  the  leaders 
of  the  new  movement  has  been  stated  by  Holyoake  as  follows : 

Societies  were  prohibited  from  holding  more  than  one  acre  of  land,  and 
that  not  as  house  or  farm  land,  but  only  for  transacting  the  business  of 

the   societies   upon Cooperative   farming  was   difficult.     No   society 

could  invest  money  except  in  savings  banks  or  national  funds.  No  society 
could  help  a  poor  society  by  a  loan.  No  member  could  save  more  than 
£100  (about  $500).  The  act  prohibited  funds  being  used  for  educational 
purposes,  and  every  member  was  practically  responsible  for  all  the  debts 
of  the  society — enough  to  frighten  any  prudent  man  away.  Besides  these 
impediments  there  was  no  provision  compelling  any  member  to  give  up  such 
property,  books,  or  records  that  might  have  been  entrusted  to  him  by  the 
society,  so  that  any  knave  was  endowed  with  the  power  and  secured  in  the 
means  of  breaking  up*  the  society  when  a  fit  of  larceny  seized  him.* 

Despite  seemingly  insurmountable  difficulties  the  twenty- 
eight  Rochdale  pioneers  were  determined  to  initiate  a  successful 
cooperative  enterprise.  Emerging  from  an  unsuccessful  strike, 
cooperation  appeared  to  them  the  most  feasible  remedy  for  their 
uncertain  economic  status.  It  was  decided,  therefore,  to  secure 
capital  for  the  purpose  of  establishing  a  cooperative  store  for 
the  benefit  of  the  workers  and  ultimately  to  *'so  arrange  the 
powers  of  production,  distribution,  education,  and  government 
as  to  create  a  self-supporting  home  colony."  There  was  every 
reason  for  regarding  this  scheme  as  visionaiy  and  Utopian,  and 
it  was  generally  so  regarded.  With  practically  no  capital  and 
no  business  experience  back  of  it  the  future  of  such  a  plan  was, 
to  say  the  least,  problematical. 

The  beginning  of  the  now  famous  Rochdale  plan  was  very 
modest.    The  first  shares  were  purchased  by  an  insignificant  fund 

*Quoted  in  the  People's  Year  Book,  1919,  p.  114. 


14  COOPERATION 

accumulated  at  the  rate  of  two  pence  a  week.  By  permitting  the 
dividend  to  accumulate  until  it  reached  £5  (about  $25)  per  man, 
a  total  of  £140  (about  $700)  was  secured,  which  provided  suffi- 
cient capital  to  rent  a  dilapidated  old  store  building  in  a  back 
street  known  as  Toad  Lane,  in  Rochdale.  Small  quantities  of 
essential  commodities  like  flour,  sugar  and  butter  were  handled, 
the  store  being  kept  open  on  Monday  and  Saturday  nights.  The 
first  week's  sales  totalled  £2  (about  $10).  The  work  was  dis- 
tributed among  the  members,  one  acting  as  salesman,  one  as 
cashier,  another  as  secretary  and  a  fourth  as  treasurer.^  The 
probability  of  an  early  demise  was  very  real,  both  in  the  minds 
of  the  public  and  the  sponsors  of  the  enterprise.  But  the  business 
prospered  and  grew,  and  became  the  genesis  of  a  world-wide 
cooperative  movement. 

The  success  of  the  early  Rochdale  experiment  may  be  attrib- 
uted to  the  following  principles  to  which  there  was  strict  ad- 
herence: (1)  Abandonment  of  the  system  of  credit  accounts; 
(2)  sound  management  and  rigid  attention  to  balance  sheets ;  (3) 
the  apportionment  of  surplus  earnings  in  proportion  to  patronage 
or  purchases;  (4)  a  persistent  desire  to  benefit  humanity  by  im- 
proving the  system  of  distribution  through  the  elimination  of 
the  profit-seeking  middleman;  and  (5)  the  provision  of  an  edu- 
cational fund  designed  to  develop  in  the  members  the  spirit  and 
ideals  of  true  cooperation.  During  the  first  two  years — until 
1846 — apportionment  for  educational  purposes  was  prohibited 
by  law,  and  for  sixteen  years  thereafter  the  policy  of  the  gov- 
ernment vacillated  between  leniency  and  legal  interference.  To 
evade  legal  obstinictions,  however,  the  educational  fund  was  in- 
corporated into  the  expenses  of  management.^ 

Gradually  cooperative  production  was  added  to  cooperative 
distribution.  Clogging,  shoemaking,  tailoring,  corn-milling,  and 
cotton-spinning  had  been  undertaken  by  1854,  and  in  1855  whole- 
saling was  commenced.  The  practical  business  sense  of  the  pio- 
neers was  manifested  in  the  development  of  cooperative  produc- 
tion and  cooperative  distribution,  both  of  which  were  closely  asso- 
ciated in  the  realization  of  their  ultimate  ideals.  They  promoted 
the  North  of  England  Cooperative  Society,  established  in  1863, 

'H.  W.  Laidler,  The  British  Cooperative  Movement,  p.  3. 
'The  People's  Tear  BooJc,  1919,  p.  115. 


STUDY  IN   CONSTRUCTIVE  ECONOMIC  REFORM  15 

which  later  developed  into  the  famous  English  Cooperative 
Wholesale  Society. 

The  success  of  the  cooperative  movement  in  this  period  of 
reorganization  exceeded  all  expectations.  In  1864  the  total 
cooperative  trade  was  approximately  £3,000,000  ($15,000,000), 
an  achievement  of  no  small  importance  for  a  movement  which 
had  been  revived  only  twenty  years  previous,  in  1844,  and  which 
was  operating  on  an  entirely  new  type  of  business  basis.  This 
success  of  consumers'  cooperation  was  all  the  more  remarkable 
when  one  recalls  the  general  failure  of  earlier  experiments  in 
producers'  cooperation.  The  growth  of  cooperative  distribution 
in  this  period  was  due  chiefly  to  the  practical  business  sense  of 
the  founders,  but  the  removal  of  legal  restrictions  which  had 
always  impeded  the  cooperative  movement  was  also  an  important 
factor.  In  1852  the  Industrial  and  Provident  Societies  Act  was 
passed,  which  afforded  cooperative  societies,  for  the  first  time 
in  their  history,  legal  protection  for  their  funds  and  appur- 
tenances, and  secured  for  their  rules  and  regulations  a  legal 
status.  Additional  political  pressure  resulted  in  the  Act  of  1862, 
which  promoted  the  interest  of  cooperation  by  enabling  its  mem- 
bers to  invest  £200  ($1,000)  instead  of  £100  ($500)  as  previously, 
and  permitted  societies  to  purchase  shares  in  other  societies. 

The  cooperative  movement  thus  secured  a  double  advantage: 
(1)  An  augmented  financial  strength,  and  (2)  the  power  to  form 
cooperative  consolidations  for  wholesale  and  similar  operations. 
As  the  movement  developed  serious  difficulties  arose  for  which 
existing  laws  furnished  no  remedy,  and  additional  legislation 
became  necessary.  The  movement  secured  relief  under  the  Act 
of  1871,  which  made  it  possible  for  societies  to  hold  and  deal 
freely  in  land  and  real  estate,  and  the  Acts  of  1876  and  1893 
which  resulted  in  the  codification  of  cooperative  law  and  allowed 
societies  to  start  banking  operations  on  the  condition  of  giving 
to  depositors  the  security  of  transferable  share  capital.'^ 

3.  TJie  Period  of  Integration,  1864-1884.  As  the  year  1844 
marks  the  revival  and  reorganization  of  the  cooperative  move- 
ment, so  the  year  1864  designates  the  genesis  of  a  period  char- 
acterized by  super-organization  and  integration.  The  vigor  of 
its  constructive  forces  is  indicated  by  the  fact  that  within  six 

'The  People's  Year  Booh,  1919,  pp.  115,  116. 


16 


COOPERATION 


years  following  the  beginning  of  this  period,  the  principal  insti- 
tutions of  the  cooperative  movement  in  the  United  Kingdom 
were  founded.  In  1864  the  English  Cooperative  Wholesale  began 
its  auspicious  business  career;  in  1869  the  Scottish  Wholesale 
began  operations,  and  in  1871  the  Cooperative  News  made  its 
first  appearance.  The  Women's  Guild  was  organized  in  1883, 
followed  by  the  establishment  of  the  Productive  Federation.  The 
progress  made  in  this  period  is  indicated  in  the  following  table. 

Table  I. — Showing  the  Status  of  Cooperation  in  the  United  Kingdom 
IN  1864  and  1884* 


Tear 

Number  of 
Societies 
Making 
Returns 

Membership 

Sales  in  the 

United 

Kingdom 

Net 
Surplus 

Share  and 

Loan 

Capital 

1864 

1884 

394 
1,291 

129,429 
729,957 

$14,183,030 
$152,120,505 

$1,122,300 
$12,174,980 

$3,866,520 
$47,492,210 

The  statistics  of  the  above  table  indicate  that  between  1864 
and  1884  there  were  approximate  increases  of  227  per  cent  in 
the  number  of  societies,  464  per  cent  in  membership,  972  per  cent 
in  sales,  980  per  cent  in  net  surplus,  and  1250  per  cent  in  share 
and  loan  capital. 

The  growth  of  cooperation  in  the  United  Kingdom  in  this 
and  subsequent  periods  is  undoubtedly  the  result  of  the  estab- 
lishment of  wholesale  societies.  It  was  by  means  of  such  societies 
that  the  process  of  integration  and  consolidation  of  the  move- 
ment was  facilitated. 

Between  1864  and  1884  the  career  of  the  English  Cooperative 
Wholesale  was  such  as  to  portend  a  permanently  successful 
career.  Premises  and  depots  were  established  at  Manchester, 
London,  Liverpool,  Glasgow,  Goole,  Leeds,  and  Bristol.  Pro- 
ductive enterprises  were  undertaken  in  biscuit-making  at 
Crumspsall,  boot  and  shoe  manufacturing  at  Leicester  and 
Heekmondwicke,  soapmaking  in  Durham,  and  coal  production 
near  Hindley.  Banking  operations  were  begun,  and  expansion 
led  to  the  establishment  of  a  half-dozen  branch  depots  in  Ire- 
land, and  others  in  Rouen,  France ;  Hamburg,  Germany ;  Copen- 
hagen, Denmark ;  and  New  York,  United  States.    A  fleet  of  four 

^Compiled  from  the  People's  Year  Book,  1919,  p.  116. 


STUDY  IN  CONSTRUCTIVE  ECONOMIC  REFORM  17 

merchant  vessels  were  acquired  by  the  society.  In  1864  the  funds 
of  the  English  Cooperative  Wholesale  Society  totalled  over  three- 
quarters  of  a  million  pounds  sterling,  or  about  $3,850,520,  and 
sales  reached  three  million  pounds  sterling,  or  approximately 
$15,000,000.  By  1884  the  society's  funds  aggregated  $47,000,000, 
and  its  sales  $152,000,000,  while  the  number  of  affiliated  societies 
making  returns  increased  from  394  to  1,291  in  the  same  period. 
As  already  indicated,  the  membership  of  these  societies  in  1864 
was  129,429,  while  in  1884  there  was  a  total  of  729,957. 

The  Scottish  Cooperative  Wholesale  Society  was  established 
in  December,  1868,  and  within  a  decade  places  of  business  had 
been  opened  at  Leith,  Kilmarnock,  and  Dundee,  in  addition  to 
the  central  premises  at  Glasgow.  Two  manufacturing  enter- 
prises had  also  been  undertaken.  But  this  was  not  the  beginning 
of  cooperation  in  Scotland.  Nearly  a  hundred  yeara  preceding 
the  establishment  of  the  wholesale  house,  the  weavers  of  the 
Ayrshire  village  of  Fenwick  had  organized  a  society  for  the 
purpose  of  providing  themselves  with  ' '  meal  and  victual. ' '  Thus 
in  1769  cooperation  was  known  to  exist  in  that  country.  In 
1777  Govan  had  a  cooperative  society  which  continued  in  opera- 
tion for  a  century,  and  in  1800  a  society  was  organized  in  Glas- 
gow and  this  one  still  exists.  Among  the  societies  which  hold 
shares  in  the  Scottish  Cooperative  Wholesale  is  a  society  which 
had  its  origin  in  1812.  Robert  Owen's  communistic  experi- 
ment at  New  Lenark,  not  far  from  Glasgow,  is  said  to  have 
enrolled  many  followers  from  the  sponsors  of  collectivism  in 
Scotland.  The  Reverend  Alexander  Campbell,  a  Glasgow  divine, 
was  preaching  "profits  in  proportion  to  purchases"  as  early  as 
1827,  and  the  earliest  records  of  the  Lennoxtown  Cooperative 
Association  show  that  it  was  dividing  profits  on  this  basis  even 
in  1826.  The  eooperators  were  manifestly  seeking  a  more  equit- 
able system  of  distribution  of  salable  necessities  than  appeared  to 
prevail  and  to  lessen  the  burden  imposed  upon  the  people  as  a 
result  of  the  wars  against  Napoleon.  In  1830  trade  unionists  of 
Glasgow  attempted  to  establish  a  cooperative  journal.  In  the 
north  of  Scotland  cooperative  societies  were  numerous.^ 

Producers'  cooperation  existed  in  Scotland  prior  to  the 
eighteenth  century,  and  records  show  that  in  1801  certain  baking 

•The  People's  Year  Book,  1919,  pp.  75,  76. 


18  COOPERATION 

societies  of  Glasgow  sold  bread  exclusively  to  their  own  members. 
These  associations  gave  no  credit  and  received  no  profit  and 
generally  sold  their  bread  ' '  one  penny,  twopence,  and  sometimes 
threepence,  or  fourpence,  on  the  quarter  loaf,  lower  than  the 
bakers'  prices."!^ 

From  this  brief  summary  of  the  genesis  of  cooperation  in 
Scotland  it  is  apparent  that  the  Scottish  Cooperative  "Wholesale 
Society  at  its  inception  in  1868  was  not  an  entirely  foreign  ven- 
ture. In  fifty  odd  years  the  growth  of  this  society  has  been  phe- 
nomenal, especially  since  the  outbreak  of  the  World  War.  "In 
distributive  trading  the  society  recognizes  no  commodity  as  out- 
side its  scope  except  alcoholic  liquor;  and  there  are  few  other 
commodities  it  does  not  supply  to  its  shareholding  societies,  "i^ 
Its  genesis  was  by  no  means  so  encouraging.  Three  months  of 
serious  effort  were  required  to  amass  a  capital  of  £1,795  ($8,975) , 
and  the  total  sales  for  that  period  amounted  to  only  £9,697 
($48,485).  The  capital  of  the  Scottish  Cooperative  Wholesale 
Society,  including  shares,  deposits,  reserve,  and  insurance  funds, 
was  only  $8,975  in  1868,  but  this  was  increased  to  $415,865  in 
1878,  and  $1,220,930  in  1884.  The  net  sales  in  these  respective 
years  were  $48,485 ;  $3,002,950;  $6,501,655;  while  the  net  profit 
increased  from  $6,515  in  1869  to  $147,170  in  1884. 

The  process  of  integration  in  the  British  cooperative  move- 
ment was  furthered  also  by  the  organization  of  the  Cooperative 
Union  and  the  Cooperative  Congress  in  1869.  The  Cooperative 
Union  is  a  federation  of  cooperative  societies  in  the  United  King- 
dom, which  operates  under  the  provisions  of  the  Industrial  and 
Provident  Societies  Acts.  Its  functions  are  to  give  legal  advice, 
spread  propaganda,  stimulate  education  in  cooperative  enter- 
prise, and  protect  the  general  interests  of  the  cooperative  move- 
ment. The  Annual  Cooperative  Congress  is  held  under  the  direc- 
tion and  auspices  of  the  Union.  The  Cooperative  Union  embraces 
the  whole  industrial  cooperative  movement  of  the  British  Isles, 
with  the  exception  of  a  minor  fraction,  and  has  been  aptly 
described  as  the  ' '  colossus  among  the  world 's  cooperative  move- 
ments." The  Cooperative  Congress  possesses  all  the  character- 
istics and  merits  of  a  single  legislative  chamber  without  execu- 

^"Ibid.,  p.  76. 


STUDY  IN  CONSTRUCTIVE  ECONOMIC  REFORM  19 

tive  power  to  enforce  its  decisions,  and  it  is  unquestionably  a 
deliberative  body  indispensable  to  the  success  of  the  British 
cooperative  movement  "whose  mind  it  mirrors,  whose  policy  it 
ratifies,  and  which  it  guides  through  the  medium  of  resolutions 
embodying  a  moral  appeal  and  obligation.  "12 

4.  TJie  Period  of  Expansion,  1884-1914.  The  period  of 
thirty  years  following  1884  is  a  remarkable  one  in  the  history  of 
British  cooperation.  It  is  a  period  characterized  not  only  by 
unprecedented  growth  in  fields  of  cooperative  production  and 
distribution,  but  also  by  the  internationalization  of  cooperation 
through  the  organization,  in  1895,  of  the  International  Coopera- 
tive Alliance,  and  the  development  of  agricultural  cooperation, 
indicated  by  the  establishment  of  the  Irish  Agricultural  Whole- 
sale Society  in  1898,  and  the  Agricultural  Association  for  Eng- 
land and  Wales  in  1904.13 

The  growth  of  the  cooperative  movement  in  this  period  is  indi- 
cated by  the  statistical  data  for  1914,  which  show  a  collective 
trade  of  $735,750,000,  as  compared  with  $152,120,000  in  1884. 
The  membership  of  the  Cooperative  Union  in  1914  was  3,200,000, 
the  aggregate  funds — share  and  loan  capital  and  reserve  funds — 
of  its  affiliated  societies  was  $320,000,000,  total  annual  sales 
amounted  to  $692,500,000,  and  net  surplus  equalled  $75,000,000. 
The  number  of  employees  of  the  Union  was  148,264  and  the 
collective  wage  bill  amounted  to  $46,068,320  for  the  year.i^ 

Wholesale  operations  manifested  unprecedented  prosperity. 
Statistics  of  the  English  Cooperative  Wholesale  Society  in  1914 
showed  a  total  turnover  of  $175,000,000,  and  net  profits  of 
$4,200,000,  as  compared  with  sales  amounting  to  $23,375,000  and 
net  surplus  of  $272,500  in  1884.  Both  the  productive  and  dis- 
tributive departments  of  the  cooperative  wholesale  experienced 
great  expansion.  There  was  an  extension  of  manufacturing 
establishments  at  home,  an  opening  up  of  new  sources  of  raw 
materials  and  supplies  by  the  organization  of  overseas  branches 
and  depots  in  Denmark,  Sweden,  Spain,  Australia,  Canada,  the 
West  Coast  of  Africa,  and  the  purchase  of  tea  plantations  in 
Ceylon  and  Southern  India  in  conjunction  with  the  Scottish 
Cooperative  Wholesale  Society.  In  1912  the  Cooperative  Insur- 
*^The  People's  Year  Book,  1919,  p.  117. 

^*Ibid.,  pp.  117-118. 


20  COOPERATION 

ance  Society  was  taken  over  by  the  English  Cooperative  Whole- 
sale. Added  to  these  achievements  was  the  establishment  of  sick 
and  burial  and  thrift  funds  for  emploj^ees,  the  extension  of  the 
minimum  wage  measure  to  all  adult  male  employees  in  1907,  and 
the  adoption  of  a  minimum  wage  scheme  for  girls  and  women 
workers  in  accordance  with  the  recommendation  of  the  Coopera- 
tive Congress.  1^ 

The  growth  of  the  Scottish  Cooperative  Wholesale  Society  is 
shown  by  the  statistics  for  1914,  which  indicate  461,645  shares 
subscribed  by  societies  and  18,669  by  employees,  a  capital  fund 
of  $24,774,575,  net  sales  amounting  to  $47,126,915,  and  net  profit 
of  $1,965,575.^^  The  corresponding  figures  for  1884  showed 
65,331  shares  subscribed  by  societies,i^  a  capital  of  $1,209,930; 
net  sales  of  $6,501,655;   and  net  profit  of  $145,170. 

The  cooperative  movement  in  the  United  Kingdom  during 
this  period  was  reenforced  by  the  English  Women's  Cooperative 
Guild,  organized  in  1883,  the  Scottish  Cooperative  Women's 
Guild,  established  in  1892,  and  the  Irish  Cooperative  Women's 
Guild,  started  in  1907,  which  have  as  their  aim  the  organization 
of  women  as  cooperators  for  the  study  and  practice  of  coopera- 
tive enterprise  and  other  methods  of  social  reform  and  im- 
proved conditions  of  domestic  life. 

5.  The  Period  of  Political  Activity  and  Super-GrowtJi,  1914 
to  the  Present.  The  outbreak  of  the  World  War  in  1914  marks 
a  new  epoch  in  the  history  of  the  British  cooperative  movement. 
The  cataclysmic  changes  incident  to  that  great  struggle  necessi- 
tated a  break  with  traditional  policies  and  methods.  Several 
problems  commanded  immediate  attention.  First,  there  was  the 
labor  situation  which  during  the  war  assumed  a  very  critical 
aspect.  To  meet  this  problem  the  cooperative  movement  estab- 
lished hours  and  wages  boards,  and  local  and  national  concilia- 
tion boards  to  adjust  controversies  with  employees.  Second,  the 
unusual  inflation  of  prices  constituted  a  serious  problem,  since 
the  public  naturally  looked  to  the  cooperatives  to  discountenance 
profiteering  and  to  steady,  if  not  abate,  the  price  level.  The 
Central  Board  of  the  Cooperative  Union  took  a  firm  position 

"7&td,  p.  118. 

"The  capital  fund  consists  of  share  capital,  deposits,  reserve,  and  in- 
surance fund. 

"In  1884  there  were  no  shares  subscribed  by  employees. 


STUDY  IN  CONSTRUCTIVE  ECONOMIC  REFORM 


21 


against  the  abuse  of  the  dividend  system,  and  reeoimnended  that 
there  be  no  increase  in  dividends  and  a  determined  effort  to  re- 
duce prices  wherever  and  whenever  possible.  Third,  the  applica- 
tion of  the  excess  profits  tax  to  the  surplus  accumulated  by  the 
cooperative  societies  resulted  in  the  endorsement  of  direct 
political  activity  on  the  part  of  cooperators.  Political  activity 
and  direct  parliamentary  representation  were  sanctioned  at  the 
Cooperative  Congress  at  Swansea,  Wales,  in  1917.  Fourth,  the 
period  of  war  and  reconstruction  revealed  the  need  for  a  unified 
cooperative  policy.  The  Swansea  Congress  declared  in  favor  of 
a  definite  national  cooperative  policy  and  an  economic  and  edu- 
cational program,  including  the  dissemination  of  propaganda 
and  general  advertising. 

(1)  TJie  Contemporary  Status  of  tJie  Cooperative  Union. 
The  statistical  data  of  the  Cooperative  Union  given  in  the  follow- 
ing table  suggest  the  recent  development  in  British  cooperation. 


Table  II. — Showing  the  Eecent  Growth  and  Status  of  Cooperation 
IN  THE  United  Kingdom" 


Class  of 

Num- 
ber 
of 

Number 
of 

Share 
and 

Sn1pn 

Net 

Number 
of 

Salaries 

'   Society 

Socie- 
ties 

Members 

Loan 
Capital 

Surplus 

Employ- 
ees 

Wages 

Distributive 

$ 

$ 

$ 

$ 

Societies 

1,357 

4,131,477 

372,056,530 

994,652,185 

101,954,165 

130,621 

71,096,600 

Distributive 

Federations. . 

5 

61 

232,560 

768,675 

50,185 

33 

18,785 

Productive 

Societies 

95 

39,331 

11,497,825 

35,235,735 

2,436,410 

11,075 

6,160,535 

Supply  Asso- 
ciations   

3 

8,351 

2,360,445 

11,191,560 

372,025 

1,732 

1,261,460 

Special 

Societies 

4 

736 

413,470 

4,771,420 

264,040 

1,154 

527,675 

Wholesale 

Societies  .... 

3 

2,063 

107,445,325 

577,285,820 

3,969,990 

42,920 

25,745,690 

Total— 1919... 

1,467 
1,474 

4,182,019 

494,006,155 

1,623,905,395 

109,047,815 

187,535 
164,383 

104,810,845 

"         1918... 

3,894,999 

402,365,750 

1,244,898,425 

88,512,835 

73,671,420 

"         1917... 

1,478 

3,835,376 

346,775,740 

1,124,568,975 

90,973,000 

162,503 

60,434,265 

1916... 

1,481 

3,566,241 

336,744,040 

986,476,610 

95,750,105 

158,715 

54,190,375 

1915... 

1,497 

3,310,524 

311,152,150 

825,170,975 

85,019,780 

155,379 

49,644,630 

"         1914... 

1,510 

3,188,140 

293,523,475 

692,765,125 

76,020,490 

148,264 

46,067,320 

"         1913... 

1,508 

3,011,390 

274,596,905 

692,365,125 

71,302,070 

142,995 

42,457,240 

"Compiled  from  the  People's  Year  Book,  1919,  1920,  1921. 


22  COOPERATION 

It  is  seen  from  the  above  statistics  tliat  the  growth  of  indus- 
trial cooperation  in  the  United  Kingdom  in  recent  years  has 
shown  no  recedence  but  in  fact  a  phenomenal  advance.  In  1919 
there  was  a  collective  membership  of  over  4,000,000,  share  and 
loan  capital  approximating  $500,000,000,  a  collective  turnover 
of  commodities  amounting  to  $1,623,905,395,  a  net  surplus  of 
$109,047,815,  about  190,000  employees,  and  a  wages  and  salaries 
bill  exceeding  $104,810,845.  This  means  that  for  the  year  1919, 
membership  increased  287,000,  or  7  per  cent;  share  and  loan 
capital  about  $92,500,000  or  23  per  cent ;  sales  about  $380,000,000, 
or  30  per  cent;  net  surplus  about  $20,000,000  or  23  per  cent; 
the  number  of  employees,  23,000,  or  14  per  cent ;  and  wages  and 
salaries  approximately  $31,150,000,  or  42  per  cent. 

Since  1913  the  membership  of  the  Cooperative  Union  has  in- 
creased 1,170,000,  or  19  per  cent;  share  and  loan  capital, 
$220,000,000,  or  80  per  cent ;  sales  $975,000,000,  or  150  per  cent ; 
net  surplus  exceeding  $37,500,000,  or  53  per  cent;  the  number 
of  cooperative  employees  over  44,000,  or  31  per  cent;  and  the 
wages  and  salaries  bill  $62,500,000,  or  147  per  cent.^^ 

(2)  The  Cooperative  Retail  Distributive  Societies.  The 
retail  distributive  societies  are  the  cells  out  of  which  the  whole 
organism  of  cooperation  is  formed.  In  1919  there  were  1,357  of 
these  societies  associated  with  the  Cooperative  Union.  These  or- 
ganizations had  a  collective  membership  of  approximately  4,200,- 
000 ;  collective  share  and  loan  capital  amounting  to  nearly  $372,- 
500,000 ;  sales  approaching  $1,000,000,000 ;  net  surplus  of  over 
$100,000,000;  an  employee  force  of  over  30,000  persons;  and 
wages  and  salaries  of  over  $71,000,000.  Of  the  total  number  of 
societies,  1,051  are  located  in  England  and  Wales,  258  in  Scot- 
land, and  48  in  Ireland.  The  English  and  "Welsh  societies  have 
a  membership  of  3,477,056,  the  Scottish  societies  617,069,  and 
the  Irish  societies  37,352. 

The  data  for  all  these  societies  show  that  in  1919  there  was 
an  increase  of  284,946  in  the  collective  membership ;  $65,082,990 
in  share  and  loan  capital ;  $223,862,370  in  sales ;  $19,475,940  in 
net  surplus ;  10,992  in  the  employee  force ;  and  $19,861,940  in 
wages  and  salaries.  These  figures  represent  increases  of  7  per 
cent  in  membership,  21  per  cent  in  share  and  loan  capital,  29  per 

"The  People's  Yea/r  Book,  1921,  pp.  49,  50. 


STUDY  IN  CONSTRUCTIVE  ECONOMIC  REFORM 


23 


cent  in  sales,  24  per  cent  in  net  surplus,  9  per  cent  in  the  number 
of  employees,  and  39  per  cent  in  wages  and  salaries,  over  the 
year  1918.  The  progress  made  by  these  societies  since  1913  is 
worthy  of  consideration. 

Table  III. — Shovting  the  Development  of  the  Cooperative  Retahj 

Distributive  Societies  of  the  United  Kingdom  duking 

THE  Period  1913-1919-" 


Year 

Num- 
ber 
of 

Socie- 
ties 

Total 
Member- 
ship 

Share 

and 

Loan 

Capital 

Sales 

Net 
Surplus 

Total 
Number  of 
Employees 
Productive 
and  Dis- 
tributive 

Total 
Salaries 

and 
"Wages 

1913.. 
1914.. 
1915.. 
1916.. 
1917.. 
1918.. 
1919.. 

1,387 
1,390 
1,375 
1,362 
1,366 
1,364 
1,357 

2,878,648 
3,054,297 
3,264,811 
3,520,227 
3,788,490 
3,846,531 
4,131,477 

$ 
213,008,825 
231,589,695 
244,242,980 
266,611,760 
278,732,465 
306,973,540 
994,652,165 

$ 
il7,951,870 
439,821,145 
512,788,895 
808,442,750 
710,018,060 
775,789,815 
994,652,185 

$ 
64,256,515 
67,509,125 
74,800,430 
81,675,395 
79,582,955 
84,582,955 
102,478,225 

103,452 
103,074 
109,449 
115,651 
118,716 
119,629 
130,621 

$ 
29,519,715 
31,599,835 
33,748,625 
37,263^080 
42,328,315 
51,234,660 
71,096,600 

The  statistics  of  this  table  indicate  that  during  the  six  years 
between  1913  and  1919  there  were  the  following  increases :  mem- 
bership, 1,252,829,  or  431/2  per  cent;  share  and  loan  capital, 
$159,047,705,  or  75  per  cent;  collective  sales,  $576,700,315,  or 
138  per  cent ;  net  surplus,  $37,697,650,  or  59  per  cent ;  the  num- 
ber of  employees,  27,169,  or  26  per  cent;  wages  and  salaries, 
$41,576,885,  or  140  per  cent. 

The  contemporary  financial  status  of  the  retail  distributive 
societies  is  seen  from  the  above  data  and  information  concerning 
reserve  funds  and  other  items  in  the  balance  sheet.  The  total 
reserve  fund  in  1919  amounted  to  about  $22,486,295  as  com- 
pared with  $21,716,360  in  1918 ;  the  value  of  the  stock-in-trade 
amounted  to  $154,777,520  as  compared  with  $117,442,955;  the 
value  of  land,  buildings,  machinery  and  fixed  stock  amounted  to 
$84,669,775  as  against  $76,235,575 ;  while  the  total  investments 
were  $203,160,890  as  compared  with  $171,014,510.  There  were 
thirty  less  societies  in  1919  than  in  1913,  and  the  average  pur- 
chases per  member  in  1919  amounted  to  approximately  $240  as 
compared  with  $140  in  1914.  This  means  an  increase  of  67  per 
^'Compiled  from  the  People's  Tear  Book,  1921,  p.  51. 


24 


COOPERATION 


cent  in  average  purchases.  Between  July,  1914,  and  August, 
1919,  food  prices  advanced  about  110  per  cent  and  the  general 
cost  of  living  about  the  same  proportion.  If  the  average  pur- 
chases per  member  had  kept  pace  with  price  changes  they  would 
have  exceeded  the  figure  for  1919  by  about  $60  per  member. 
Price  advances  forced  economy.^i 

(3)  Cooperative  Productive  Societies,  Excliisive  of  WJiole- 
sale  Societies.  As  already  suggested,  producers'  cooperation  has 
had  a  much  more  checquered  and  less  successful  career  than  con- 
sumers' societies.  This  has  been  generally  true  wherever  pro- 
ductive societies  have  been  organized.  Yet,  such  societies  still 
exist  and  frequently  meet  with  a  fair  degree  of  success.  In  the 
United  Kingdom  there  were  95  productive  societies  (exclusive 
of  wholesales)  associated  with  the  Cooperative  Union  in  1919, 
with  a  total  membership  of  ncjarly  40,000.  The  share  and  loan 
capital  of  these  societies  at  that  time  was  $11,500,000,  and  their 
sales  exceeded  $35,000,000.  In  the  same  year  the  net  surplus  of 
productive  societies  approximated  $2,450,000,  their  employee 
force  numbered  over  11,000,  and  they  paid  over  $6,000,000  in 
wages  and  salaries.  For  the  period  1913-1919  the  reports  of  these 
societies  show  the  following  increases :  membership,  4,669,  or  13 
per  cent;  share  and  loan  capital,  $2,992,660,  or  35  per  cent; 
sales,  $15,684,565,  or  90  per  cent;  net  surplus,  $1,171,340,  or  93 
per  cent;  employees,  633,  or  6  per  cent;  wages  and  salaries, 
$3,178,735,  or  107  per  cent.  Complete  data  for  this  period  are 
given  in  the  table  below. 

Table  IV. — Showing  the  Growth  of  Cooperative  Productive  Societies 
IN  THE  United  Kingdom,  1913-1919^ 


Year 

Number 

of 
Socie- 
ties 

Member- 
ship 

Share  and 

Loan 

Capital 

Trade 

Surplus 

Number 
of 

Employ- 
ees 

Wages 

$ 

$ 

$ 

$ 

1913.. 

108 

34,662 

8,505,165 

18,551,170 

1,265,070 

10,442 

2,981,900 

1914.. 

108 

36,880 

9,111,745 

19,003,135 

1,383,960 

10,725 

3,067,775 

1915.. 

103 

34,912 

8,440,590 

19,300,260 

1,584,480 

10,657 

3,174,605 

1916.. 

101 

35,142 

8,858,020 

22,307,455 

1,669,210 

10,284 

3,660,530 

1917.. 

97 

36,358 

9,024,770 

25,732,295 

1,798,700 

10,038 

3,834,230 

1918.. 

95 

37,393 

9,872,395 

28,570,205 

1,993,010 

9,745 

4,563,925 

1919.. 

95 

39,331 

11,497,825 

37,235,735 

2,436,410 

11,075 

5,160,635 

-CompUed  from  the  People's 


Year  Boole,  1921,  p.  52. 


STUDY  IN   CONSTRUCTIVE  ECONOMIC  REFORM  25 

(4)  Cooperative  Supply  Associations.  Cooperative  Supply 
Associations  have  not  manifested  promising  development  in  the 
United  Kingdom  during  the  period  1913-1919.  In  several  par- 
ticulars these  societies  have  shown  a  marked  decline.  The  data 
for  1913  indicated  that  there  were  four  supply  associations,  with 
a  membership  of  95,061 ;  share  and  loan  capital  equalling 
$2,816,200 ;  a  total  trade  of  $10,393,305 ;  a  surplus  of  $246,155 ; 
a  working  force  of  1,956;  and  a  wages  bill  of  $898,440.  The 
report  for  1919  shows  three  societies,  with  a  total  membership  of 
only  8,351 ;  share  and  loan  capital  amounting  to  $2,360,445 ; 
trade  aggregating  $11,191,560;  surplus  totalling  $372,025;  a 
working  force  of  1,732 ;  and  a  wages  bill  of  $1,261,460.23  Com- 
pared with  the  statistics  for  1913,  these  figures  show  a  decrease 
of  25  per  cent  in  the  number  of  societies  and  91  per  cent  in 
membership.  There  was  a  decrease  also  of  $445,755,  or  15  per 
cent  in  share  and  loan  capital,  and  224,  or  11  per  cent  in  the 
number  of  workers.  On  the  other  hand  surplus  was  increased 
$126,170,  or  about  51  per  cent,  and  wages  $363,020,  or  about  30 
per  cent.  The  phenomenal  advance  in  commodity  prices  is  un- 
doubtedly the  cause  of  these  increases  in  surplus  and  wages. 

(5)  The  Cooperative  Wholesale  Societies.  In  1919  the  three 
cooperative  wholesale  societies — the  English  Cooperative  Whole- 
sale, the  Scottish  Cooperative  Wholesale,  and  the  Irish  Agri- 
cultural Wholesale  had  a  combined  membership  of  2,063  societies ; 
share  and  loan  capital  amounting  to  $107,445,325 ;  sales  aggre- 
gating $577,285,820 ;  net  surplus  equalling  $3,969,990 ;  an  em- 
ployee force  of  42,920 ;  and  total  wages  and  salaries  amounting 
to  $25,745,690.  Compared  with  1918  these  figures  indicate  an 
increase  of  31,  or  I14  per  cent  in  the  affiliated  society  member- 
ship ;  $24,646,835,  or  30  per  cent  in  share  and  loan  capital ; 
$145,277,385,  or  35  per  cent  in  sales;  $389,700,  or  10  per  cent 
in  net  surplus;  10,340,  or  32  per  cent  in  the  number  of  em- 
ployees ;  and  $9,026,910,  or  54  per  cent  in  wages  and  salaries. 

If  we  examine  the  recent  growth  of  the  English  and  Scottish 
Cooperative  Wholesale  Societies  (apart  from  the  Irish  Agricul- 
tural Wholesale)  we  find  the  following  increases  for  the  period 
1913  to  1919 ;  society  membership,  627,  or  44  per  cent ;  share 
and  loan  capital,  $57,359,435,  or  1141^  per  cent;   sales,  $375,- 

^'The  People's  Tear  Book,  1921,  p.  52.      ' 


26  COOPERATION 

605,775,  or  186  per  cent ;  number  of  employees,  13,241,  or  45  per 
cent;  wages  and  salaries,  $16,717,430,  or  185  per  cent.  At  the 
same  time,  there  was  a  decrease  of  $914,255,  or  19  per  cent,  in 
net  surplus.24 

(6)  The  English  Cooperative  Wholesale,  1913-1919.  The 
work  accomplished  and  the  position  taken  by  the  English  Co- 
operative Wholesale  Society  during  the  period  of  the  World  War 
was  such  as  to  command  admiration.  Its  economic  policy  and 
its  political  and  social  cooperation  exemplified  the  high  princi- 
ples upon  which  the  whole  cooperative  movement  is  founded.  The 
record  of  the  society  was  one  of  unselfish  public  service.  In  con- 
trast with  the  profiteering  proclivities  of  many  business  enter- 
prises, the  cooperative  wholesale  adopted  a  deliberate  policy  of 
conducting  its  affairs  on  the  basis  of  minimum  prices.  To  the 
extent  of  its  pre-war  purchases  the  society  kept  the  price  of 
commodities  at  the  pre-war  level,  and  when  additional  stocks 
were  purchased  at  an  increased  price  the  wholesale  disposed  of 
them  at  a  level  much  below  prevailing  market  quotations.  Even 
when  the  Government  assumed  control  of  food  distribution  the 
cooperative  wholesale  elected  to  be  placed  on  the  lowest  footing 
as  regards  rates  of  commission,  thus  saving  the  country  as  much 
as  from  4  per  cent  to  6  per  eent.^^ 

In  addition  to  its  price  stabilizing  policy,  the  English  Co- 
operative Wholesale  placed  its  warehouses  at  the  disposal  of  the 
Ministry  of  Food,  and  its  buyers  in  foreign  countries  aided  in 
providing  supplies  for  the  various  governmental  departments. 
Many  of  the  officers  of  the  society  became  advisers  to  various 
governmental  committees  on  food  supply  and  distribution,  and 
its  representatives  secured  the  abolition  of  restrictions  that  were 
prejudicial  to  the  consumer.  Because  of  its  excellent  work  in 
furnishing  supplies  to  the  military  and  naval  forces  and  the 
nation,  the  cooperative  wholesale  became  known  as  the  "uni- 
versal provider."  Practically  6,000  members  of  the  staff  of  the 
C.W.S.  enlisted  and  about  600  of  these  were  killed  in  the  service 
of  their  country.  Ninety  British  and  three  foreign  distinguished 
service  medals  were  awarded  various  members  of  this  staff.  The 
cooperative  wholesale  paid  a  sum  of  approximately  $3,500,000 

^Ilid.,  p.  53. 

*The  People's  Tear  Book,  1920,  p.  89. 


STUDY  IN   CONSTRUCTIVE  ECONOMIC  REFORM 


27 


in  wages  to  employees  after  joining  the  colors,  and  guaranteed 
equivalent  reinstatement  on  return  at  the  conclusion  of  the  war. 
Thus  the  spirit,  organization,  and  policy  of  the  English  Co- 
operative Wholesale  were  a  constructive  force  in  the  greatest 
national  crisis  of  centuries. 

With  such  a  record  of  patriotic  public  service  in  a  time  when 
there  was  a  strong  temptation  and  unusual  opportunity  to 
profiteer,  there  is  little  wonder  that  the  British  cooperative  move- 
ment in  general,  and  the  C.W.S.  in  particular,  have  experienced 
rapid  growth  during  the  last  six  years.  This  growth  is  mani- 
fested tellingly  in  the  statistical  data  for  the  period  subsequent 
to  1913.  Between  1913  and  1919  there  was  an  increase  of  41 
societies,  or  3i/^  per  cent,  in  the  English  Cooperative  Wholesale. 
In  addition,  there  was  an  increase  of  $47,258,960,  or  1491/^  per 
cent,  in  its  share  and  loan  capital ;  $289,888,710,  or  185  per  cent, 
increase  in  sales;  11,211,  or  over  53  per  cent,  in  the  number 
of  employees ;  and  a  total  increase  of  $13,295,515,  or  192  per  cent, 
in  wages  and  salaries.^^  The  net  surplus  in  1919  was 
$1,949,755,  or  61  per  cent,  less  than  in  1913.  The  data  for  each 
year  of  the  period  are  given  in  the  table  below. 

In  addition  to  its  share  and  loan  capital  the  English  Co- 
operative Wholesale  Society  has  reserve  and  insurance  funds 
and  other  assets  which  in  1919  brought  the  total  financial  re- 
sources up  to  $118,203,585. 

Table  V. — Showing  the  Growth  of  the  English  Cooperative 
Wholesale  Societt,  1913-1919" 


Year 

Society 
Members 

Share  and 

Loan 
Capital 

Wholesale 

Distributive 

Trade 

Net 
Surplus 

Number 

of 
Workers 

Wages 

$ 

$ 

$ 

$ 

1913.... 

1,168 

31,603,815 

156,859,880 

3,180,595 

20,994 

6,916,270 

1914. . . . 

1,193 

31,505,085 

174,554,065 

4.200,345 

23,190 

7,696,770 

1915.... 

1,195 

33,207,99'0 

215,508,735 

5,434,810 

23,924 

8,887,030 

1916.... 

1,189 

35,546,455 

261,150,370 

7,595,025 

22,215 

9,098,635 

1917.... 

1,192 

34,686,625 

288,550,665 

6,575,775 

22,777 

9,919,045 

1918.... 

1,200 

59,484,705 

325,839,805 

802,690 

24,10'0 

12,645,685 

1919.... 

1,209 

78,862,775 

446,746,590 

1,240,840 

32,205 

20,211,785 

^The  People's  Year  Boole,  1921,  p.  53. 

"Compiled  from  the  People's  Year  Book,  1921,  p.  54. 


28  COOPERATION 

The  efforts  of  the  Society  are  not  confined  to  distributive 
cooperation;  it  has  prosperous  productive  works  as  well.  In 
1919  the  value  of  supplies  from  these  productive  enterprises 
amounted  to  $129,425,150,  as  compared  with  $88,647,840  in  1918, 
$92,907,775  in  1917,  $81,317,500  in  1916,  and  $64,064,780  in  1915. 
The  increased  production  in  1919  was  valued  at  $42,438,435,  or 
48%  per  cent,  over  1918. 

(7)  The  Scottish  Cooperative  Wholesale  Society,  1913-1919. 
During  the  year  immediately  preceding  the  World  War  (1913) 
the  Scottish  Cooperative  Wholesale  Society  was  doing  as  much 
business  in  one  day  as  it  did  in  the  whole  of  the  first  three  months 
of  its  existence.  When  the  war  broke  out  and  a  general  mora- 
torium was  established,  credit  and  trade  were  thrown  into  con- 
fusion. The  grain  dealers  of  Canada  and  the  United  States,  for 
example,  showed  unwillingness  to  sell  commodities  except  for 
cash.  The  buyers  of  the  British  milling  trade,  except  the  co- 
operative wholesales,  were  unprepared  to  meet  this  contingency. 
Because  they  were  able  to  pay  cash,  the  buyers  of  the  S.C.W.S. 
were  able  to  select  their  grains,  command  the  best  quality,  and 
secure  favorable  terms.  The  advantages  of  these  favorable  bar- 
gains were  not  limited  to  the  shareholders  but  extended  to  all 
consumers  who  desired  to  purchase  flour  and  bread  at  the  co- 
operative stores.  ''All  over  Scotland,  societies  determined  to 
sell  at  normal  prices  so  long  as  possible;  competitors  could  not 
charge  more  than  the  stores;  and  so  the  great  mass  of  people, 
owing  to  the  strength  of  the  Scottish  Cooperative  Wholesale 
Society,  were  saved  during  a  long  period  from  an  imposition 
they  would  have  had  to  bear  without  any  real  reason  save  the 
natural  desire  of  the  profiteers  to  make  profit  whenever  the 
slightest  opportunity  came  to  them."28  The  Society  was  able  to 
perform  this  patriotic  service  by  means  of  a  great  network  of 
organizations  for  collecting  wheat  all  over  Canada.  It  has  grain 
elevators  along  the  main  railways  and  along  the  shores  of  the 
Great  Lakes,  in  addition  to  its  central  depot  at  Winnepeg. 

Not  only  did  the  society  take  an  active  part  in  keeping  down 
prices  of  commodities  and  in  selling  considerably  under  the 
market  quotations  whenever  possible,  but  its  representatives  ren- 
dered valuable  service  to  government  committees  in  the  distribu- 

=«The  People's  Year  BooTc,  1919,  p.  77. 


STUDY  IN   CONSTRUCTIVE  ECONOMIC  REFORM  29 

tion  of  food  and  in  opening  up  new  sources  of  supply.  The 
society  took  an  important  part  in  the  equipment  of  the  forces 
with  boots  and  clothing,  and  in  supplying  canteens  with  pro- 
visions, the  total  value  of  the  contracts  with  the  government  de- 
partments amounting  to  $5,274,350  for  the  period  from  1915  to 
1919.  In  addition,  2,075  of  the  society's  employees  joined  the 
forces,  of  whom  139  were  disabled  and  315  were  killed.  "The 
society  also  agreed  that  all  men  would  be  taken  back  into  their 
situations  at  the  close  of  the  war,  or  when  they  were  demobilized, 
and  during  the  time  they  were  absent  and  in  army  service  the 
difference  between  their  army  pay  and  allowances  received  from 
the  army  and  the  wages  which  they  were  being  paid  on  joining 
the  service  was  paid  to  them  by  the  society. ' '  Up  to  the  end  of 
June,  1919,  the  amount  of  wages  thus  paid  was  approximately 
$695,000.  Considerable  assistance  was  given  by  the  society  to 
the  Belgian  refugees,  and  Calderwood  Castle,  on  the  estate  owned 
by  the  society,  was  equipped  by  it  and  was  occupied  by  Belgian 
refugees  for  over  four  years,  the  total  amount  expended  by  the 
association  being  $32,590.^^ 

The  Scottish  Cooperative  Wholesale  has  established  produc- 
tive centers  that  are  supplying  goods  to  the  value  of  over  six 
million  pounds  ($30,000,000)  annually.  During  the  fifty  odd 
years  of  its  existence  its  sales  have  exceeded  $1,080,000,000,  upon 
which  it  has  returned  to  purchasers  in  the  fonn  of  profits  over 
$35,000,000.  During  this  whole  period  total  losses  from  bad 
debts  and  investments  have  been  only  about  four  cents  on  each 
$500  worth  of  commodities  sold.^'^  The  society  has  no  bank,  like 
the  English  Cooperative  Wholesale  Society  operates,  but  it  has 
furnished  loans  to  the  city  of  Glasgow  below  the  prevailing  rate 
of  interest. 

In  1919  the  Scottish  Cooperative  Wholesale  had  266  society 
members;  $27,591,050  in  share  and  loan  capital;  a  wholesale 
distributive  trade  of  $123,945,200 ;  and  net  surplus  of  $2,683,310. 
In  that  year  the  society  employed  10,523  persons  who  were  paid 
$5,409,205  in  wages  and  salaries,  and  $50,120  in  bonuses.  If  we 
compare  these  statistics  with  those  for  1918  we  find  the  following 
increases :  share  and  loan  capital,  $4,859,570 ;  sales  $26,347,775 ; 

»Tlie  People's  Year  BooTc,  1920,  p.  108. 
"^lUd.,  1919,  p.  81. 


30 


COOPERATION 


number  of  employees,  2,199 ;  wages  and  salaries,  $1,421,715 ;  and 
bonuses,  $3,380.  At  the  same  time  net  surplus  showed  a  de- 
crease of  $6,655.  Detailed  information  for  the  period  since  1913 
is  given  in  the  following  table. 

Table  VI. — Showing  the  Growth  of  the  Scottish  Cooperative 
Wholesale  Society,  1913-1919^ 


Share  and 

Wholesale 

Number 

Year 

Society 
Members 

Loan 
Capital 

Distributive 
Trade 

Net 
Surplus 

of 

iVorkers 

Wages 

Bonua 

$ 

$ 

$ 

$ 

$ 

1913... 

268 

18,482,075 

44,820,165 

1,703,650 

8,685 

2,029,075 

82,915 

1914... 

266 

20,650,850 

47,126,515 

1,965,575 

8,877 

2,651,890 

93,915 

1915... 

264 

22,323,065 

56,815,375 

2,282,580 

9,103 

2,773,170 

65,085 

1916... 

262 

22,823,185 

72,512,050 

2,507,655 

8,307 

2,965,825 

63,070 

1917... 

263 

21,289,090 

85,399,210 

2,504,575 

8,522 

3,279,370 

50,080 

1918... 

261 

22,731,480 

97,597,425 

2,739,965 

8,324 

3,987,550 

46,540 

1919... 

266 

27,591,050 

123,945,200 

2,683,010 

10,523 

5,409,265 

50,120 

It  will  be  seen  from  the  statistics  of  the  above  table  that,  as 
compared  with  the  data  for  1913,  there  were  the  following  in- 
creases in  1919:  share  and  loan  capital,  $9,108,975,  or  49  per 
cent;  sales,  $79,125,035,  or  76  per  cent;  net  surplus,  $979,660, 
or  57  per  cent;  number  of  employees,  1,838,  or  21  per  cent ;  and 
salaries  and  wages,  $3,380,090,  or  169  per  cent.  There  was  a 
decrease  of  $32,795,  or  3.9  per  cent  in  bonuses.  Moreover,  in 
addition  to  its  share  and  loan  capital  of  $9,108,975,  the  Scottish 
Cooperative  Wholesale  Society  had  reserve  funds  amounting  to 
$6,185,725,  making  its  total  resources  in  1919  about  $33,776,775. 
The  output  of  the  society's  productive  enterprises  in  1919 
amounted  to  $39,117,675,  as  compared  with  $27,462,640  in  1918, 
$31,494,285  in  1917,  and  $23,540,515  in  1916. 

(8)  The  Irish  Agricultural  Wholesale  Society,  1915-1919. 
The  progress  of  the  Irish  Agricultural  Wholesale  Society  during 
the  period  between  1915  and  1919  is  indicative  of  the  important 
part  which  this  organization  is  destined  to  play  in  the  future 
economic  history  of  Ireland.  In  1915  the  wholesale  had  a  mem- 
bership of  327 ;  share  and  loan  capital  approximating  $141,125  ; 
wholesale  distributive  trade  aggregating  $1,876,895 ;  surplus 
amounting  to  $15,705  ;  an  employee  staff  of  81 ;  and  a  total  wage 

''Compiled  from  the  People's  Year  Boole,  1921,  p.  54. 


STUDY  IN   CONSTRUCTIVE  ECONOMIC  REFORM  31 

bill  of  $27,000.  In  1919  membership  totalled  588 ;  share  and  loan 
capital,  $991,500 ;  wholesale  distributive  trade,  $6,594,030 ;  sur- 
plus, $45,840 ;  a  working  force  of  192 ;  and  a  total  wage  bill  of 
$124,640,  In  addition  the  society  reported  reserve  funds  of 
$65,035. 

(9)  Cooperative  Production.  It  has  already  been  suggested 
that  producers'  industrial  cooperation  has  met  with  very  little 
success  in  comparison  with  consumers'  distributive  cooperation. 
This  conclusion  is  not  applicable  to  the  productive  works  and 
enterprises  owned  and  operated  by  distributive  societies  such  as 
the  English  Cooperative  Wholesale  Society  and  the  Scottish  Co- 
operative Wholesale  Society. 

These  two  British  wholesales  own  and  operate  successfully 
factories  and  establishments  for  the  production  of  clothing,  cabi- 
nets and  brushes,  tobacco,  preserves  and  groceries,  biscuits,  flour 
and  meal,  soaps,  paints  and  varnishes,  and  numerous  other  com- 
modities. Iron  works,  tinplate  mills,  coal  mines,  woolen  mills, 
weaving  sheds,  tanneries,  creameries,  tea  plantations,  and  a  mer- 
chant fleet  are  among  the  productive  enterprises  that  contribute 
so  largely  to  the  success  of  the  cooperative  wholesale  societies. 
The  cooperative  tea  plantations  in  the  East  owned  jointly  by  the 
societies  had  a  total  acreage  of  58,989  in  1920,  of  which  5,373 
acres  were  in  Ceylon,  36,167  acres  in  South  India,  and  17,449 
acres  in  Assam.  The  English  Cooperative  Wholesale  alone  has 
estates  in  Great  Britain  with  a  total  acreage  of  34,281,  valued  at 
$11,419,360,  of  which  33,232  acres  are  in  farms  and  similarly  pro- 
ductive holdings.^  2 

During  the  fifty-three  weeks  ending  June  28,  1919,  the  value 
of  supplies  turned  out  by  the  productive  works  of  the  English 
Cooperative  Wholesale  Society  amounted  to  $106,852,935.  The 
net  profit  on  this  total  production  was  only  $174,265,  or  less  than 
one  penny  (four  cents)  on  the  pound  ($5).  For  the  year  ending 
June  26,  1920,  the  value  of  supplies  turned  out  by  these  works 
was  $150,495,165,  and  these  were  sold  at  $860,055  net  profit,  or  a 
little  over  one  penny  (d  11/4)  per  pound.^^  For  the  entire  year 
1919,  the  goods  turned  out  by  the  English  Cooperative  Wholesale 
Society  productive  works  were  valued  at  $129,425,150,  as  com- 

«='Tho  People's  Year  BooTi:,  1921,  p.  113. 
^Uhid.,  p.  110. 


32  COOPERATION 

pared  with  $88,647,840  in  1918;  $92,907,775  in  1917;  $81,- 
317,500  in  1916 ;  and  $64,064,780  in  1915.  The  increase  in  the 
value  of  goods  produced  by  these  works  in  1919  was  $42,438,435 
over  the  previous  year.^^  In  1919  the  output  of  the  Scottish 
Cooperative  Wholesale  productive  works  was  valued  at  $39,- 
117,675,  as  compared  with  $27,462,640  in  1918 ;  $31,474,285  in 
1917 ;  and  $23,540,515  in  1916.35 

(10)  Cooperative  Banking.  The  cooperative  credit  associa- 
tions of  the  United  Kingdom  are  of  recent  origin  as  compared 
with  the  continental  European  societies  organized  to  provide 
credit  facilities  for  small  producers.  The  organizations  in  the 
United  Kingdom  which  are  designed  to  develop  cooperative 
credit  and  banking  include  the  Cooperative  Wholesale  Society's 
Bank,  Urban  Cooperative  Banks,  Rural  Credit  Societies,  the  Cen- 
tral Cooperative  Agricultural  Bank,  and  Labor  Loan  Societies. 
There  is  space  here  only  to  review  briefly  the  banking  depart- 
ment of  the  English  Cooperative  Wholesale  Society. 

After  a  series  of  conferences  concerning  the  necessity  and 
practicability  of  a  cooperative  banking  department,  the  mem- 
bers of  the  English  Cooperative  Wholesale  Society,  in  1872,  de- 
cided ' '  That  in  order  to  commence  and  gradually  develop  a  bank- 
ing business,  authority  be  given  to  the  committee  to  receive  sur- 
plus capital  from  the  members,  withdrawable  at  call,  and  sub- 
ject to  the  current  bank  rate  of  interest,  the  same  to  be  used  in 
our  own  business,  or  lent  out  on  approved  security.^^ 

The  first  years  of  banking  experience  were  anything  but  suc- 
cessful for  the  E.  C.  W.  S.  This  was  due  partly  to  the  opposition 
of  a  minority  of  the  cooperators  who  did  not  favor  the  step  which 
had  been  taken  by  the  society  in  this  regard.  These  persons  or- 
ganized an  ' '  Industrial  Bank ' '  which  sustained  heavy  losses  and 
failed  after  a  brief  existence.  Losses  were  also  sustained  by  the 
banking  department  of  the  cooperative  wholesale  society,  but  the 
department  was  continued  and  in  1887  there  were  210  cooperative 
societies  holding  accounts  in  it,  the  receipts  during  that  year 

^liid.,  p.  54. 
^Ilid.,  p.  55. 

'^Quoted  in  the  British  Board  of  Trade  (Labor  Department)  Beport  on 
Industrial  and  Agricultural  Cooperative  Societies  in  the  United  Kingdom, 
1912,  p.  XII. 


STUDY  IN  CONSTRUCTIVE  ECONOMIC  REFORM         33 

amounting  to  $86,882,075,  and  the  profits — after  payment  of 
interest — to  $21,110.  Besides,  the  department  had  accumulated 
a  reserve  fund  of  $32,185.  By  1909  current  accounts  had  been 
opened  by  909  societies,  while  current  accounts  and  deposits 
swelled  the  total  receipts  to  $319,818,670.  In  that  year  the  de- 
partment's profit  amounted  to  $170,520,  and  its  reserve  fund 
totalled  $248,345.37  At  the  end  of  June,  1920,  there  were  5,754 
current  accounts  with  the  bank,  of  which  1,016  were  held  by 
cooperative  soeieties,  3,347  by  trade  unions  and  friendly  societies, 
and  1,391  by  clubs  and  other  mutual  organizations.  In  addition 
there  were  281  deposit  accounts  of  trade  unions  and  friendly  soci- 
eties which  had  no  current  accounts  with  the  department.^s 

Prior  to  1921  the  banking  operations  of  the  society  were  con- 
ducted in  the  department  at  Manchester,  but  the  increasing 
volume  of  trade  union  and  workmen's  clubs'  accounts  has  necessi- 
tated larger  facilities,  and  the  bank  has  now  established  a  branch 
in  London.  This  initial  development  of  branch  banking  on  the 
part  of  a  British  cooperative  society  promises  much  for  the  co- 
operative movement  and  the  labor  movement  in  Britain.  A  sys- 
tem of  branch  banks,  subsidiary  to  the  central  department  at 
Manchester  will  make  it  possible  to  take  adequate  care  of  the 
funds  of  cooperative  societies  and  will  doubtless  result  in  an 
increasing  volume  of  business  from  labor  organizations  and  other 
associations.  For  the  year  ending  June  26,  1920,  the  total  de- 
posits and  withdrawals  reported  by  the  banking  department 
amounted  to  approximately  $2,942,056,020  as  compared  with 
$2,248,354,920  for  the  corresponding  period  of  1918-1919.  This 
was  an  increase  of  $693,701,700  for  the  former  period,  or  36l^ 
per  cent  for  the  half  year  from  June  28  to  December  27,  1919, 
over  the  same  period  in  1918,  and  261/^  per  cent  for  the  half  year 
from  December  27,  1919,  to  June  26,  1920,  over  the  corresponding 
period  in  1918-1919.39 

The  profits  of  the  banking  department  of  the  English  Co- 
operative Wholesale  Society  are  distributed  among  the  customers 
in  proportion  to  their  patronage  in  a  given  period,  non-members 
receiving  a  dividend  of  one-half  the  rate  paid  to  members. 

"British  Board  of  Trade,  op.   cit.  pp.  XII,  XIII. 
**The  Teople's  Yem  Bonlc,  1921,  p.  108. 


34 


COOPERATION 


(11)  Recent  Growth  in  Cooperative  Employmerit.  The  co- 
operative societies  of  the  United  Kingdom  are  assuming  an  in- 
creasingly important  position  as  employers  of  labor.  This  posi- 
tion is  indicated  very  clearly  in  the  data  on  cooperative  employ- 
ment since  1914,  which  are  given  in  the  following  table. 

Table  VII. — Showing  the  Growth  in  the  Number  op  Cooperative 

Employees  Associated  with  the  Cooperative  Union  of 

Great  Britain,  1914-1919« 


Total 
Workers 

Engaged  in 

Wages 

Year 

Production 

Distribution 

Number 

Percent 
of  Total 

Number 

Percent 
of  Total 

Productive 

Distributive 

1914... 

148,264 

63,275 

42.68 

84,989 

57.32 

$ 
19,923,915 

$ 
26,143,405 

1915... 

155,379 

66,486 

42.79 

88,893 

57.21 

21,345,085 

28,299,545 

1916... 

158,715 

62,401 

39.32 

96,314 

60.68 

22,734,370 

31,456,005 

1917... 

162,503 

61,404 

37.79 

101,'099 

62.21 

24,383,070 

36,051,195 

1918... 

164,383 

62,401 

37.96 

101,982 

62.04 

29,576,270 

44,095,150 

1919... 

187,535 

78,483 

41.85 

109,052 

58.15 

43,989,455 

60,821,390 

According  to  the  statistics  of  the  above  table  there  was  an 
increase  of  39,271,  or  27  per  cent,  in  the  total  number  of  em- 
ployees in  1919  over  the  total  for  1914,  while  in  the  same  period 
the  aggregate  wage  bill  increased  $57,743,525,  or  125  per  cent. 
In  1914  there  were  63,275  persons  employed  in  the  productive 
works,  while  in  1919  there  were  78,483  pereons  so  employed,  in- 
dicating an  increase  of  15,208,  or  24  per  cent.  Total  wages  paid 
to  the  workers  in  productive  enterprises  were  $24,065,540,  or  121 
per  cent,  larger  than  in  1914.  When  we  turn  to  the  question  of 
employment  in  distributive  divisions  we  find  that  the  total  num- 
ber of  employees  increased  from  84,989  in  1914  to  109,052  in  1919, 
an  increase  of  25,063,  or  29  per  cent,  for  the  latter  year,  while 
the  total  wage  bill  for  these  workers  was  $34,677,985,  or  132  per 
cent,  greater  in  1919  than  in  1914.  It  is  interesting  to  note  fur- 
ther that  the  collective  employee  group  of  148,294  persons  in 
1914  received  aggi-egate  wages  of  $46,067,320,  an  average  of 
about  $311  a  year,  while  the  187,535  employees  in  1919  received 

*°Tlie  data  in  this  table  are  compiled  from  the  People's  Year  Boole, 
1921,  p.  55, 


STUDY  IN  CONSTRUCTIVE  ECONOMIC   REFORM  35 

$104,810,845,  which  was  an  average  of  $559.  This  was  an  in- 
crease of  about  70  per  cent  in  the  average  for  the  period.  Retail 
prices  of  food  in  the  United  Kingdom  were  109  per  cent  higher 
in  July,  1919,  than  in  July,  1914,  according  to  official  reports, 
and  similar  advances  occurred  in  the  prices  of  other  necessities. 
The  average  level  of  retail  prices  of  all  commodities  included  in 
the  statistical  report  of  the  British  Ministry  of  Labor  (food, 
rent,  clothing,  fuel  and  light,  and  miscellaneous  items)  was  165 
per  cent  higher  at  the  close  of  1920  than  in  July,  1914.*i  Con- 
stant readjustment  in  wages,  therefore,  became  a  serious  problem. 

(12)  The  Employment  Policy  of  tJie  Cooperators.  The  atti- 
tude of  cooperative  societies  towards  their  employees  is  a  subject 
about  which  all  persons  interested  in  the  cooperative  movement 
wish  to  know  something.  The  data  on  cooperative  employment 
presented  in  the  preceding  paragraph  show  that  cooperative 
societies  are  large  employers  of  labor.  Moreover,  it  is  interesting 
to  note  that  if  we  take  the  total  number  of  employees  in  connec- 
tion with  the  collective  membership  of  retail  distributive  soci- 
eties we  find  that  the  proportion  of  the  movement  employing  its 
own  members  runs  somewhat  as  follows:  1914,  4.85  per  cent; 
1915,  4.76  per  cent;  1916,  4.51  per  cent;  1917,  4.29  per  cent; 
1918,  4.27  per  cent,  and  1919,  4.53  per  cent.^s  It  is  evident, 
therefore,  that  the  percentage  of  employees  who  are  also  mem- 
bers of  the  cooperative  societies  is  very  small,  and  that  the  busi- 
ness activities  are  carried  on  by  employees  paid  a  salary  or  a 
wage,  the  same  as  in  a  private  establishment.  The  engagement 
and  discharge  of  the  manager,  shop  assistants  and  other  em- 
ployees is  left  to  the  committee,  assisted  often  by  a  sub- 
committee. 

Profit  sharing  with  employees  has  been  adopted  by  only  a 
few  retail  societies,  and  even  plans  introduced  by  the  wholesales 
seem  to  have  been  unsuccessful.  Both  in  productive  and  dis- 
tributive departments  little  progress  has  been  made  by  schemes 
designed  to  divide  profits  with  the  workmen.  In  1870  the  Scot- 
tish Cooperative  Wholesale  Society  introduced  a  profit  sharing 
plan  which  provided  that  employees  should  receive  a  dividend 
on  wages  at  a  rate  equal  to  twice  the  amount  paid  to  members  on 

*^The  Labour  Gazette,  Vol.  XXIX,  No.  1   (January,  1921)   p.  1. 
"The  People's  Year  BooTc,  1921,  p.  55.  ; 


36  COOPERATION 

purchases.  In  1883  a  distinction  was  made  between  distributive 
and  productive  employees  and  a  differential  rate  introduced.  In 
1892  the  plan  was  further  modified,  all  employees  being  given 
a  bonus  on  wages  at  the  same  rate  as  dividends  on  purchases  to 
members,  half  of  which  was  retained  in  a  special  bonus  loan  fund, 
bearing  interest  at  3  per  cent  per  annum.  Except  ^vith  the  con- 
sent of  the  committee,  deposits  in  this  fund  were  withdrawable 
only  after  expiration  of  three  months  from  date  of  employee's 
separation  from  the  service  of  the  society.  The  Scottish  Whole- 
sale has  continued  to  pay  bonuses,  as  already  shown,  the  total 
amount  paid  as  bonus  on  wages  during  the  period  1913  to  1919, 
inclusive,  being  $451,625. 

In  1873  the  English  Cooperative  Wholesale  Society  adopted 
a  bonus  system,  but  this  was  discontinued  in  1876  as  unsatisfac- 
tory. In  1882  a  kind  of  profit-sharing  plan  was  adopted  but  this 
was  abandoned  in  1886.  In  1907  a  ''Thrift  Fund"  was  estab- 
lished, in  which  all  employees — productive  and  distributive — 
may  participate  after  six  months  of  service.  The  purposes  of 
this  fund  are  "to  make  provision  for  the  retirement  of  its  con- 
tributors through  old  age,  or  incapacity  caused  by  infirmity  of 
body  or  mind,  the  encouragement  of  thrift,  and  the  creation  of  a 
bond  of  interest  between  the  Society  and  employees  which  shall 
be  mutually  advantageous."  Both  the  society  and  employees 
were  designated  as  contributors  to  this.  fund.  In  addition  to 
these  measures  the  English  Cooperative  Wholesale  has  introduced 
a  minimum  wage  scale,  and  various  welfare  schemes  in  its  pro- 
ductive works.  The  welfare  work  inaugurated  in  1917  has  since 
been  extended  to  several  of  the  society's  enterprises,  and  includes 
social,  recreational,  educational,  and  medical  facilities.  Every, 
effort  is  also  made  to  provide  for  amicable  adjustment  of  dis- 
putes with  employees. 

The  Cooperative  Movement  in  the  United  States 

1.  Historical  Sketch  of  Cooperation  in  tJie  United  States. 
The  cooperative  movement  which  was  revived  by  the  twenty-eight 
Rochdale  pioneers  in  an  attempt  to  secure  relief  from  poverty 
and  unemployment  incident  to  a  strike,  soon  spread  to  the  United 
States.  In  no  other  country  has  cooperative  enterprise  been 
launched  more  frequently.     Until  recent  years,  however,  the 


STUDY  IN  CONSTRUCTIVE  ECONOMIC   REFORM  37 

movement  in  this  country  has  had  a  very  cheequered  and  un- 
certain career,  characterized  by  sporadic  bursts  of  cooperative 
enthusiasm  followed  by  dismal  failure  and  eventual  decay.  But 
the  ideal  and  spirit  of  cooperation  have  at  no  time  vanished  com- 
pletely. Failure  has  always  been  followed  after  a  time  by  addi- 
tional experiments  on  the  part  of  farmers  and  wage-earners, 
whose  imaginations  have  been  captured  by  the  practical  idealism 
of  distributive  cooperation.  Brief  review  of  the  development  of 
the  cooperative  movement  in  this  country  will  help  us  to  appre- 
ciate the  serious  difficulties  as  well  as  the  possible  successes  of 
cooperative  effort. 

(1)  Tlie  Genesis  of  tlie  Movement,  1794-1861.  The  incep- 
tion of  the  cooperative  movement  in  the  United  States  dates  back 
to  a  time  preceding  Robert  Owen  in  England.  In  1794  the 
journeymen  cordwainers'  union  of  Baltimore  established  a  co- 
operative boot  and  shoe  factory  for  the  purpose  of  providing 
employment  to  its  members.  A  second  attempt  was  made  by 
this  same  trade  in  1806,  after  their  trial  for  conspiracy.  Periods 
of  industrial  depression  and  excessive  prices  of  commodities  con- 
tinued to  force  the  attention  of  wage-earners  to  possible  relief 
through  cooperative  effort.  Cooperative  stores  were  opened,  but 
many,  like  those  in  Cincinnati  and  Philadelphia,  failed  chiefly 
because  they  sold  goods  at  less  than  prevailing  market  prices.  As 
early  as  1836  a  cooperative  convention  was  held,  and  producers' 
cooperative  enterprises  were  initiated  in  several  trades,  but  these 
experiments,  like  their  predecessors,  were  doomed  to  failure.^^ 
The  real  spirit  of  cooperation  and  true  cooperative  policies  were 
lacking  in  these  early  experiments. 

Probably  the  first  true  example  of  consumers'  cooperation  in 
the  United  States  was  the  ' '  buying  club  "  or  "  division  store ' '  or- 
ganized by  a  tailor  in  the  city  of  Boston  in  1844.  Communistic 
communities  had  been  established  prior  to  that  date  and  had 
practiced  the  principles  of  cooperation.  This  was  true  of  the 
Shakers'  colony  established  at  New  Lebanon,  Columbia  County, 
New  York,  in  September,  1787.  Many  similar  colonies  were  or- 
ganized and  some  still  remain.  But  the  genesis  of  consumers' 
cooperative  societies  as  we  know  them  today  is  found  in  the  Bos- 
ton experiment.    Out  of  this  attempt  among  the  members  of  the 

*^C.  W.  Perkey,  Cooperation  in  the  United  States,  p.  5. 

71835 


38  COOPERATION 

New  England  Association  of  Mechanics  and  Workingmen  there 
developed  in  1847  the  Workingmen 's  Protective  Union,  the 
gro'wth  of  which  is  indicated  by  the  fact  that  in  1852,  403 
branches  and  sub-divisions  of  the  Union  had  been  established,  and 
165  of  these  reported  sales  for  the  preceding  year  amounting  to 
$1,696,825.46. *■*  As  a  result  of  a  schism  in  this  movement,  the 
American  Protective  Union  was  organized  in  1853.  By  1857 
this  organization  was  conducting  business  in  ten  states  and  re- 
ported the  operation  of  350  divisions,  $291,000  capital,  and  an 
annual  trade  amounting  to  $2,000,000.  In  1856  the  original  New 
England  Protective  Union  reported  63  divisions,  3,584  members, 
$130,912  capital,  and  a  trade  volume  for  1855  totalling 
$1,005,882.02.4^  Both  of  these  associations  succumbed  with  the 
outbreak  of  the  Civil  War  in  1861,  failure  being  attributed  to  the 
practice  of  selling  commodities  at  cost,  incompetent  management, 
extension  of  credit,  lack  of  intelligence,  and  the  absence  of  a  true 
cooperative  spirit. ^^ 

In  1853,  the  International  Industrial  Assembly  of  America, 
having  a  membership  of  200,000,  promoted  cooperation,  and  in 
1866  the  National  Labor  Union  adopted  the  same  policy,  urging 
the  establishing  of  cooperative  stores  and  workshops  in  every 
kind  of  business  in  all  sections  of  the  country,  but  little  or  nothing 
of  a  practical  experiment  seems  to  have  been  started  by  these  or- 
ganizations. Their  influence  was  chiefly  constructive  in  demand- 
ing legislation  designed  to  aid  the  cooperative  societies.  The 
stores  existing  in  this  period  were  mere  purchasing  agencies.*^ 

(2)  TJie  Period  of  FurtJier  Experimentation,  1866-1917. 
Immediately  following  the  Civil  War,  in  1866,  the  Patrons  of 
Industry,  a  farmers'  association,  was  organized,  and  established 
a  number  of  cooperative  stores,  some  of  which  still  exist.  The 
early  career  of  this  movement  was  auspicious,  but  soon  it  declined 
and  many  of  its  stores  lost  their  cooperative  features.  Remnants 
of  this  grange  movement  sui^ived,  however,  there  being  a  whole- 
sale society  and  150  retail  stores  in  Texas  in  1885,  and  in  1894- 
1895  the  wholesale  reported  sales  amounting  to  $65,000  and  a 

**Adams  and  Sumner,  Labor  Prohlems,  p.  398. 

"Bemis,  History  of  Cooperation  in  the  United  States,  p.  23. 

*" Adams  and  Sumner,  op.  cit.,  p.  399. 

*'C.  W.  Perkey,  op.  cit.,  p.  6. 


STUDY  IN  CONSTRUCTIVE  ECONOMIC  REFORM  39 

commission  business  of  $222,661.91,  By  1896  the  movement  had 
suffered  further  decline,  and  little  of  it  remains  today. ''^ 

Like  the  Patrons  of  Industry,  the  Knights  of  Labor  (organ- 
ized in  1869)  established  productive  and  distributive  cooperative 
societies  on  a  large  scale,  but  lack  of  the  cooperative  ideal  and 
vision  soon  caused  the  stores  to  degenerate  into  mere  commission 
houses,  and  the  movement  became  an  aggressive  labor  movement 
using  the  strike  and  securing  legislation  to  achieve  the  aims  of 
the  workers. 

The  cause  of  cooperation  was  given  great  impetus  by  the 
Sovereigns  of  Industry,  a  purely  cooperative  association,  organ- 
ized in  1874.  Stores  were  established  throughout  the  North 
Atlantic  States,  and  in  1875  the  association  reported  101  Coun- 
cils, with  6,670  members,  engaged  in  distributive  cooperation. 
Fully  one-half  of  the  stores  started  by  this  organization  were 
operated  on  the  Rochdale  plan,  and  this  fact  has  earned  for  the 
Sovereigns  of  Industry  the  distinction  of  being  the  first  to  estab- 
lish firmly  that  system  on  the  American  continent.  Poor  meth- 
ods of  administration  and  unsound  business  policies  forced  the 
dissolution  of  the  association  in  1879,  although  some  of  its  stores 
continued  as  independent  enterprises  and  many  that  suspended 
operation  were  not  compelled  to  do  so  for  financial  reasons.^^ 

An  innovation  in  cooperative  experiments  in  America  was 
made  in  the  organization  of  the  Labor  Exchange  at  Independ- 
ence, Missouri,  in  1889.  Members  of  the  association  were  privi- 
leged to  bring  to  the  exchange  any  commodity  they  desired,  and 
received  payment  in  the  form  of  a  labor  check  for  an  equivalent 
value  in  the  local  wholesale  market,  where  goods  could  be  pur- 
chased at  retail  prices.  Non-members  could  trade  at  the  ex- 
change, either  by  the  use  of  labor  checks  or  legal  money.  The 
movement  had  135  branch  exchanges  spread  throughout  thirty- 
two  states,  with  a  membership  of  6,000  in  1896.  Following  the 
death  of  its  founder — Mr.  G.  B.  De  Bernardi — the  experiment 
soon  declined.^" 

Isolated  experiments  in  cooperation  continued  in  the  United 
States  during  the  first  decade  of  the  twentieth  century.    Move- 

^'Adams  and  Sumner,  op.  cit.,  pp.  399,  400. 
"Ibid.,  p.  400. 
""Ibid.,  p.  401. 


40  COOPERATION 

ments  of  a  more  or  less  sporadic  nature  developed  in  New  Eng- 
land, the  Middle-West,  the  West,  especially  in  Kansas,  and  in 
the  Pacific  Coast  region.  In  the  Central  West  and  Northwest 
the  movement  was  aided  very  materially  by  the  Eight  Eelation- 
ship  League,  organized  in  Chicago  in  1898,  to  promote  a  plan  of 
cooperation  involving  equal  ownership  of  stock;  one-man-one 
vote,  and  no  proxy  voting ;  business  conducted  strictly  on  a  cash 
basis,  or  produce  or  labor ;  sale  of  commodities  at  current  market 
prices;   and  an  annual  division  of  profits.^^ 

(3)  The  Period  of  Revival  and  Unification,  1914  to  the 
Present.  From  what  has  already  been  said  concerning  coopera- 
tion during  the  nineteenth  century  it  is  evident  that  the  coopera- 
tive movement,  which  has  become  so  important  a  factor  in  the 
social,  economic,  and  political  life  of  Europe,  has  met  with  far 
less  success  and  very  severe  reverses  in  the  United  States.  Spor- 
adic movements  have  developed  only  to  decline  with  more  or 
less  rapidity.  The  movement  in  this  country  lacked  both  unity 
and  continuity. 

Recent  developments  in  the  American  cooperative  movement, 
however,  give  greater  promise  of  success.  There  are  now  certain 
well-defined  geographic  centers  of  cooperative  effort,  including 
Seattle  and  San  Francisco  on  the  Pacific  Coast;  Minneapolis 
and  St.  Paul  in  the  Northwest ;  Chicago  in  the  Central  West ; 
and  New  York  City  in  the  East.  Clustering  around  these  centers 
of  the  movement  are  over  three  thousand  consumers'  cooperative 
societies  operating  stores.  In  several  of  these  territorial  divisions 
the  purchasing  power  of  the  retail  societies  has  become  so  large 
that  a  number  of  wholesale  associations  have  been  established  to 
nourish  and  cement  the  isolated  organizations. 

2.  The  Contemporary  Status  of  Cooperation  in  the  United 
States.  At  no  other  period  in  the  history  of  this  country  has 
the  cooperative  ideal  been  more  generally  accepted  than  in  the 
years  subsequent  to  the  outbreak  of  the  World  War.  The  rapid 
ascent  of  the  general  price  level  since  1915  and  the  failure  of 
wages  to  keep  pace  with  prices  have  stimulated  widespread 
experimentation  in  distributive  cooperation  in  almost  every  state. 
Brief  review  of  recent  developments  will  suffice  to  show  the  extent 
to  which  the  tide  of  cooperative  enterprise,  which  had  receded 

"/6td.,  p.  406. 


STUDY  IN  CONSTRUCTIVE  ECONOMIC  REFORM  41 

80  far,  has  returned  to  enlist  the  enthusiasm  of  American 
farmers  and  wage-earners.  There  are  two  fairly  distinct  co- 
operative movements  in  America  today.  One  of  these  comprises 
farmers  organized  mainly  as  producers,  the  other  is  composed 
largely  of  workingmen  who  are  organized  mainly  as  consumers. 
We  are  concerned  here  especially  with  consumers'  cooperation. 

(1)  Farmers'  Distributive  Cooperation.  Agricultural  co- 
operation in  the  United  States,  influenced  considerably  by  federal 
and  state  departments  of  agriculture  and  agricultural  colleges, 
has  experienced  steady  progress  during  the  last  decade  or  so,  and 
today  is  being  given  unprecedented  attention.  Cooperative  agri- 
cultural associations  are  now  estimated  to  number  several  thou- 
sand, a  large  number  of  which,  sponsored  and  guided  by  the 
American  Society  of  Equity,  the  National  Grange,  and  the 
Farmers'  Educational  and  Cooperative  Union,  now  promote  the 
establishment  of  cooperative  distributive  societies.  The  National 
Conference  on  Marketing  and  Farm  Credits  established  the  Na- 
tional Agricultural  Organization  Society  to  promote  cooperative 
enterprises.  Several  grain  states  of  the  Central  West  have  fed- 
erated state  associations  into  the  National  Council  of  Farmers' 
Associations.  Other  super-organizations  have  been  established 
for  the  purpose  of  marketing  farm  products. 

The  Farmers'  Educational  and  Cooperative  Union  spread 
from  Texas,  where  it  was  organized  in  1902,  into  nearly  every 
state.  The  Union  is  especially  strong  in  Kansas  where  there  are 
today  750  cooperative  societies  operating  retail  stores.  In  that 
state  there  are  300  cooperative  associations  conducting  retail 
stores  and  exchanges  for  the  sale  of  agricultural  products  and 
machinery.  Cooperative  elevatoi^  are  numerous,  as  they  gen- 
erally are  throughout  the  grain  states  of  the  Central  West  and 
Northwest,  and  many  societies  own  flour  mills.  The  total  busi- 
ness of  600  societies  of  the  Kansas  Union  in  1919  amounted  to 
$200,000,000,  while  the  turnover  of  the  150  independent  coopera- 
tive societies  was  estimated  to  be  $20,000,000  in  the  same  year. 
One  farmers'  society  does  a  business  of  $5,000,000  annually,  its 
retail  store  alone  having  an  annual  trade  of  $400,000.  The  John- 
son County  Cooperative  Association  at  Olathe,  Kansas,  which 
was  organized  in  1876,  does  a  business  of  over  $200,000  annually, 
makes  a  net  surplus  of  $15,000  a  year  for  its  members,  and  has  a 


42  COOPERATION 

strong  reserve  fmid.  The  Shawnee  Cooperative  Association  at 
Topeka  has  over  1,000  trade  unionist  members.^^ 

Cooperative  production  and  distribution  first  assumed  a  posi- 
tion of  prominence  in  Nebraska  about  1915.  In  1919  there  were 
150  grain  elevators  in  that  state  operated  cooperatively,  the  best 
one  of  which  cleared  over  $20,000  in  1918,  while  shipments 
through  the  various  elevators  have  resulted  in  a  saving  of  from 
2  to  5  cents  per  bushel  for  the  farmers.  A  farmers'  exchange 
for  the  cooperative  sale  of  live  stock  and  butter  made  a  profit  of 
$12,000  in  1918.53  xhe  Farmers'  State  Exchange  at  Omaha  is  a 
central  wholesale  house  doing  an  annual  business  of  $3,000,000.^^ 
The  membership  of  the  various  cooperative  enterprises  in 
Nebraska,  including  cooperative  store  societies,  was  over  40,000 
in  1919,  and  in  1918  approximately  $100,000,000  worth  of  busi- 
ness was  done  by  these  associations. ^^ 

Farmers'  creameries  have  followed  cooperative  principles 
more  closely  than  have  farmers'  elevators.  It  was  estimated  that 
in  1919  there  were  2,000  cooperative  cheese  factories  and  3,000  co- 
operative creameries  in  the  United  States.  In  that  year  "Wis- 
consin had  308  creameries  and  718  cheese  factories  operated  on 
a  cooperative  basis.  Cooperative  live-stock  selling  associations 
are  increasing  rapidly  in  number.  In  1918  Wisconsin  had  at 
least  130  such  associations  which  shipped  in  that  year  stock 
valued  at  $10,000,000.  But  farmers  are  not  stopping  with  co- 
operative distribution  of  live  stock  and  other  products ;  they  are 
even  going  into  the  meat  packing  business.  The  Farmers'  Co- 
operative Meat  Packing  Company  of  Madison,  Wisconsin,  had 
about  6,000  members  in  1919.  On  the  Pacific  Coast  cooperative 
meat  packing  plants  and  cooperative  fish  and  fruit  canneries  are 
operated.  In  Olympia,  Washington,  producers  were  operating 
cooperatively  in  1919  about  31  shingle  mills,  2  laundries,  1 
slaughterhouse,  1  packing  plant,  1  fish  cannery,  1  bakery,  1  milk 
condensary,  1  dairy,  2  printing  plants,  and  a  daily  newspaper 

"^James  Peter  Warbasse,  The  Cooperative  Consumers'  Movement  in  the 
United  States,  p.  5. 

^^Monthly  Labor  Eeview  of  the  United  States  Bureau  of  Labor  Sta- 
tistics, March,  1919,  p.  134. 

"Warbasse,  op.  ait.  p.  5. 

'^^Monthly  Labor  Eeview  of  the  United  States  Bureau  of  Labor  Sta- 
tistics, March,  1919,  p.  134. 


STUDY  IN   CONSTRUCTIVE  ECONOMIC  REFORM  43 

with  a  circulation  of  40,000.    A  cooperative  lumber  mill,  a  ship- 
yard, and  a  bank  were  organized  in  the  same  year.^'' 

Cooperative  marketing  of  fruit  has  been  made  possible 
through  fruit  growers '  associations  in  various  parts  of  the  United 
States.  Four-fifths  of  all  the  citrous  fruit  grown  in  California 
is  sold  through  such  agencies.  The  California  Fruit  Growers' 
Exchange,  having  a  membership  of  about  8,000,  shipped  between 
15  and  16  million  boxes  of  citrous  fruit  in  1918.  There  has  also 
been  some  cooperative  effort  among  the  cotton  growers  of  the 
South,  but  they  are  less  well  organized  than  the  fruit,  grain, 
and  dairy  farmers. 

In  1917  there  were  in  the  United  States  5,462  farmers'  organi- 
zations of  various  kinds  with  an  annual  volume  of  cooperative 
business  exceeding  $625,000,000.  In  the  order  of  the  amount  of 
business  done  they  stood  as  follows :  cooperative  elevators,  fruit 
and  produce  associations,  cotton  associations,  retail  stores,  live 
stock  shipping  associations,  and  tobacco  distributive  societies.^''' 

(2)  Consumers'  Cooperative  Societies.  Agricultural  asso- 
ciations are  organized  mainly  for  cooperative  distribution  of 
products,  and  they  tell  us  nothing  of  the  efforts  of  consumers  to 
organize  and  operate  retail  and  wholesale  societies  among  other 
groups  in  our  population.  Producers'  cooperation  has  never  at- 
tained much  success  in  the  United  States,  but  cooperative  dis- 
tribution has  periodically  developed  surprising  strength,  espe- 
cially in  recent  years.  High  prices,  industrial  depression,  unem- 
ployment, and  strikes  result  in  a  recurrence  of  cooperative  effort 
on  the  part  of  wage-earners  and  other  groups  in  America.  Ex- 
amination of  some  of  the  more  important  and  successful  soci- 
eties and  the  general  aspects  of  the  cooperative  movement  in  sev- 
eral states  will  indicate  the  recent  development  of  consumers' 
cooperation  in  this  country. 

(a)  Michigan  Cooperatives.  The  Ishpeming  Consumers' 
Association  of  Northern  Michigan  dates  back;  to  February,  1890. 
This  association  does  a  general  business  and  conducts  a  store, 
having  at  present  about  1,000  members  and  an  annual  trade  of 
over  $300,000.  Since  its  inauguration  thirty  years  ago  the  asso- 
ciation has  refunded  to  its  members  in  interest  and  savings  on 

"76mZ.,  p.  135. 
"Ibid.,  p.  136. 


44  COOPERATION 

purchases  $320,000.  In  the  same  part  of  Michigan  is  the  Tam- 
arack Cooperative  Association,  organized  in  1890,  which  has 
about  1,700  members.  Ever  since  it  was  organized  this  society 
has  paid  regularly  interest  on  invested  capital  and  its  divi- 
dends on  purchases  have  never  been  less  than  8  per  cent  nor 
more  than  13  per  cent.  In  twenty  years  it  has  paid  returns 
in  cash  aggregating  $1,595,185  to  its  members.  The  Soo 
Mercantile  Association  was  organized  in  1912,  and  in  1920  it 
had  a  membership  of  400.  This  association  conducts  five  stores, 
a  meat  market,  and  a  bakery,  and  does  an  annual  business  of 
$375,000.  There  are  forty  other  societies  in  the  same  part  of 
Michigan  in  which  these  larger  societies  are  located,  while  in  the 
southern  part  of  the  state  there  are  a  hundred  additional  asso- 
ciations.^^ 

With  the  encouragement  of  the  State  Federations  of  Labor 
and  the  United  Mine  Workers  the  miners  and  steel  workers  in 
other  states  are  following  the  successful  exemplification  of  co- 
operative enterprise  in  Michigan. 

(b)  Tlie  Cooperative  Movement  in  Illinois.  As  in  Pennsyl- 
vania, which  has  200  cooperative  societies  averaging  150  members, 
and  in  Indiana,  Ohio,  and  other  states,  organized  labor  has 
assumed  the  leadership  in  establishing  cooperative  wholesale  and 
retail  societies  in  the  state  of  Illinois.  Illinois  had  about  100 
cooperative  societies  in  1920,  of  which  more  than  one-half  were 
connected  with  the  Central  States  Wholesale  Society,  with  head- 
quarters at  Springfield  and  at  East  St.  Louis.  It  is  estimated 
that  the  annual  business  of  cooperative  societies  in  this  state 
amounts  to  $10,000,000,  Most  of  these  societies  are  controlled  by 
men  who  have  come  up  from  the  mines  and  shops  and  assumed 
the  general  business  and  financial  direction  of  the  movement. 

Chicago  is  the  center  of  much  of  this  cooperative  activity. 
The  Palatine  Cooperative  Society  of  Chicago  has  a  capital  of 
$500,000,  a  membership  of  1,200,  and  conducts  a  school  with  400 
Polish  students. /in  February,  1919,  the  Cooperative  Society  of 
(America  was  organized  in  Chicago  for  the  purpose  of  cutting 
down  the  cost  of  living  by  establishing  and  operating  a  chain 
of  retail  and  wholesale  groceries  in  Chicago  and  vicinity.  The 
plan  of  this  society  is  to  open  916  stores,  with  not  less  than  300 

"^Warbasse,  op.  dt.,  pp.  6,  7. 


STUDY  IN   CONSTRUCTIVE  ECONOMIC  REFORM  45 

members  each.  Buying  clubs  are  formed  as  soon  as  100  members 
are  found  in  any  one  district,  and  this  is  followed  by  a  store  as 
soon  as  300  members  subscribe  for  stock  in  the  society.  Secre- 
taries can  order  goods  for  buying  clubs  direct  from  the  society's 
wholesale  in  Chicago,  at  a  discount  of  5  per  cent  on  purchases. 
A  large  number  of  stores  were  opened  in  Chicago  in  1920,  espe- 
cially among  the  immigrant  population.  These  stores  gave  one 
the  impression  of  being  well-managed,  and  they  were  doing  a 
good  business.  Wholesale  and  distributive  warehouses  were 
operated  in  1920,  and  were  well  stocked  with  goods.  In  addition 
to  the  wholesale  and  retail  departments  the  society  has  an  edu- 
cational department  in  which  managers  of  stores  and  stock  sales- 
men are  trained.  A  regular  school  is  operated,  the  mornings 
being  devoted  to  class  work  for  prospective  managers  and  sales- 
men, and  the  afternoons  to  the  practical  work  of  managing  and 
selling.  Memberships  were  sold  originally  at  a  par  value  of 
$25.00,  but  these  soon  advanced  to  $37.50,  and  a  rise  to  $100 
was  predicted  by  the  administrative  officers  of  the  society. 
f^  The  Cooperative  Society  of  America  is  managed  by  a  board 
\  of  three  trustees,  who  receive  no  salaries  but  are  entitled  to  divide 
j  41^  per  cent  of  the  net  profits  among  themselves.  A  large  force 
i-^of  experienced  stock  salesmen  are  employed.  The  society  claims 
to  operate  on  the  Rochdale  plan;  to  pay  6  per' cent  on  share 
capital;  5  per  cent  on  actual  food  purchases;  and  to  distribute 
the  surplus,  after  deducting  the  trustees '  commission,  among  the 
members.  The  number  of  memberships  or  shares  which  any  one 
may  purchase  is  limited  to  twenty.  In  1920  the  society  claimed 
a  total  of  20,000,  but  the  goal  is  to  enlist  400,000  members.  The 
society  designates  itself  as  a  ''common  law  tnist,"  which  it  de- 
fines as  ' ' an  equal  partnership  of  people  without  any  partnership 
liability ....  formed  for  the  purpose  of  growing,  manufacturing, 
and  distributing  food  to  its  members  through  a  chain  of  retail 
stores.  "^^  By  comparing  this  society  with  the  British  societies 
already  discussed  the  reader  will  see  that  the  former  is  by  no 
means  a  pure   Rochdale  organization.     The   concentration  of 

^"The  data  concerning  this  society  were  secured  mostly  through  personal 
interviews  with  the  trustees  of  the  society  and  from  its  published  pamphlets, 
"The  Cooperative  Society  of  America"  and  "Answers  to  Questions  of 
Prospective  Members." 


46  COOPERATION 

power  in  the  hands  of  a  small  body  of  three  trustees  is  one  of  the  I 
things  that  precludes  the  democratic  control  so  conspicuous  in^^ 
the  British  Rochdale  plaii^^^^ 

In  addition  to  the  above,  Chicago  and  other  parts  of  Illinois 
have  numerous  other  cooperative  retail  and  wholesale  societies. 
In  an  attempt  to  learn  the  status  of  these  societies  questionnaires 
were  mailed  to  seventy  of  them  and  personal  visits  were  made  by 
the  Avriter  to  a  large  number  of  the  stores,  including  two  whole- 
sales. Eleven  of  the  questionnaires  were  returned  unclaimed, 
which  is  fairly  substantial  evidence  of  the  failure  of  that  number 
of  societies;  twenty-four  societies  failed  to  answer  the  com- 
munication, and  through  other  channels  it  was  learned  that 
these  had  either  ceased  to  exist  or  had  become  ordinary  non- 
cooperative  business  ventures;  while  for  thirty-five  societies 
fairly  complete  returns  were  received.  Twenty-four  of  these 
thirty-five  answered  practically  all  questions.  Of  these,  3  had 
an  original  capital  investment  of  less  than  $1,000 ;  10  had  from 
$1,000  to  $2,000;  3  from  $2,000  to  $3,000;  2  from  $3,000  to 
$4,000 ;  1  from  $4,000  to  $5,000 ;  4  from  $5,000  to  $10,000 ;  and 
1  had  $10,000.  According  to  the  reports  concerning  the  capital 
of  these  societies  in  1920,  2  had  capital  of  less  than  $2,000 ;  4 
from  $2,000  to  $4,000 ;  4  from  $4,000  to  $5,000 ;  7  from  $5,000 
to  $10,000 ;  4  from  $10,000  to  $50,000 ;  1  over  $50,000,  while 
two  did  not  report  on  this  point.  None  of  these  societies  were 
organized  prior  to  1911,  and  most  of  them  are  only  a  few  years 
old.  The  total  amount  of  capital  invested  originally  by  these 
societies  was  $67,027.84,  while  the  total  reported  for  1920  was 
$400,336.17,  an  increase  of  497  per  cent  within  a  few  years.  The 
monthly  volume  of  business  runs  from  $150  in  the  case  of  a 
purchasing  club  to  $21,000  or  $30,000  in  the  most  successful 
stores. 

All  of  these  societies  are  administered  by  a  board  of  several 
members  known  as  the  Board  of  Directors,  elected  by  the  mem- 
bers. Voting  power  in  the  majority  of  the  associations  is  dis- 
tributed on  the  basis  of  one  vote  to  each  member,  although  a 
considerable  number  adopt  the  principle  of  vote  distribution 
according  to  the  number  of  shares  owned.  In  most  cases  the 
number  of  shares  that  any  member  may  hold  is  limited  to  five, 
but  the  limit  is  ten  in  three  societies,  and  in  the  case  of  two  asso- 


STUDY  IN   CONSTRUCTIVE  ECONOMIC  REFORM  47 

ciations  there  is  no  limit.  The  stores  are  under  the  direction  of 
a  paid  manager  who  usually  receives  the  prevailing  union  wage. 
Twenty-two  out  of  the  twenty-four  societies  reporting  either 
refuse  credit  or  limit  the  amount  to  about  three-fifths  of  the  value 
of  shares  owned,  credit  on  loan  capital  being  extended  to  the  full 
value  of  loan  capital  invested.  No  credit  is  given  non-members, 
except  in  one  or  two  societies.  Dividends  on  purchases  range 
from  2  to  7  per  cent.  The  membership  is  comprised  chiefly  of 
miners,  farmers,  and  railroad  employees.  In  six  of  the  socie- 
ties the  shareholders  are  reported  as  foreign  born,  in  sixteen 
the  members  are  native  Americans,  while  in  two  the  member- 
ship consists  of  both  native  and  foreign  born. 

The  Cooperative  Society  of  Bloomington,  Illinois,  which  was 
opened  June  12,  1918,^^  is  typical  of  the  successful  societies  in 
this  state.  The  membership  of  this  society  consists  of  union 
workers,  75  per  cent  of  whom  are  railroad  men  and  25  per  cent 
are  wage-earners  in  the  building  trades  and  miscellaneous  crafts. 
There  is  nothing  in  the  by-laws  that  prohibits  any  persons,  not 
members  of  a  labor  union,  from  joining  the  society.  Because 
the  store  is  not  located  in  the  neighborhood  where  its  shareholders 
live,  fully  90  per  cent  of  the  orders  are  received  over  the  tele- 
phone and  are  delivered  by  truck.  The  society  has  10  employees, 
including  a  manager  who  is  paid  $200  a  month,  a  bookkeeper,  a 
cashier,  5  clerks,  and  2  delivery  boys.  All  employees  are  paid 
at  least  the  minimum  union  wage.  ''Honest  weights  and 
measures"  is  the  slogan  of  the  society,  and  all  bulk  goods  are 
sold  by  weight,  a  policy  which  has  proved  advantageous  to  the 
customers.  In  1920  the  society  purchased  75  per  cent  of  its  sup- 
plies from  local  wholesale  houses  and  25  per  cent  from  the  Cen- 
tral States  Cooperative  Society,  located  at  East  St.  Louis.  In 
1921  this  ratio  is  being  reversed,  fully  75  per  cent  of  the  com- 
modities being  purchased  from  the  Central  States  Cooperative. 

Like  other  cooperatives  in  this  state,  the  Bloomington  society 
handles  a  full  line  of  groceries,  overalls,  shirts,  and  other  sup- 
plies in  general  demand.  Whenever  possible  union  label  goods 
are  handled.  All  commodities  are  sold  at  standard  prices,  used 
in  all  other  stores  of  the  city,  and  no  attempt  is  made  to  cater  to 

""The  data  concerning  the  Bloomington  Society  is  from  a  special  report 
issued  in  1920. 


48  COOPERATION 

cut  price  goods.  The  store  has  learned  what  most  cooperative 
stores  in  the  state  have  learned,  namely,  that  the  working  class 
prefers  goods  of  the  best  quality  at  standard  prices  to  poor 
goods  at  low  prices.  "It  makes  a  legitimate  profit  on  each  and 
eveiy  article  and  does  not  emphasize  'specials'  with  a  lower 
price  than  usual  to  attract  trade." 

Credit  is  extended  to  members  up  to  75  per  cent  of  the  capital 
invested.  Originally  each  member  held  five  shares  at  $5,  but 
by  recent  vote  the  stock  was  doubled  and  now  five  shares  at 
$10  is  the  limit.  No  credit  is  given  to  non-members,  so  that  there 
are  no  losses  through  bad  debts,  since  no  member  can  over-buy 
his  capital  stock.  If  a  member  finds  he  cannot  pay,  the  amount 
he  owes  is  subtracted  from  his  stock,  and  the  store  makes  a  final 
settlement  before  he  withdraws  from  the  society.  Such  cases, 
however,  have  been  rare. 

Many  cooperative  stores  have  failed  because  managers  were 
inexperienced,  especially  in  the  matter  of  buying.  In  their 
eagerness  to  satisfy  the  varied  demands  of  the  general  trade, 
cooperative  stores  have  frequently  purchased  too  wide  a  range  of 
goods  to  use  successfully.  It  has  been  found  more  advantageous 
to  limit  the  number  of  brands  and  sizes  and  to  acconunodate  the 
trade  only  on  articles  in  frequent  demand,  thus  carrying  as  little 
"dead  stock"  as  possible.  Another  mistake  in  buying  has  been 
the  purchase  of  excessive  quantities  from  expert  solicitors  and 
salesmen  upon  whose  advice  inexperienced  managers  have  too  fre- 
quently relied.  The  Bloomington  society,  like  the  others,  has 
met  these  difficulties. 

Another  common  difficulty  has  been  the  limited  amount  of 
working  capital  which  prevents  the  manager  from  taking  ad- 
vantage of  discounts  for  cash  or  payments  in  ten  or  thirty  days. 
To  meet  this  difficulty  the  Bloomington  society  did  what  a  large 
number  of  other  societies  have  done — increased  its  capital.  On 
January  24,  1920,  the  capitalization  was  increased  from  $10,000 
to  $20,000,  the  shares  advancing  from  $5  to  $10  each,  and  the 
limit  for  any  one  member  from  $25  to  $50.  On  February  21, 1920, 
a  new  building  was  purchased  at  a  cost  of  $20,000.  The  society 
has  a  Committee  on  Education,  consisting  of  ten  members,  which 
is  aiding  materially  in  meeting  the  difficulties  that  arise  in  the 
administration  of  the  store. 


STUDY  IN  CONSTRUCTIVE  ECONOMIC  REFORM  49 

During  a  strike  wage  earners'  cooperative  stores  in  Illinois 
give  aid  to  union  men  who  are  not  members  of  the  society.  If  a 
striker  is  not  given  credit  by  his  local  grocer  he  gets  a  credit 
slip  from  his  organization,  signed  by  the  president  and  secretary, 
allowing  him  to  purchase  a  certain  amount  of  goods  at  the  co- 
operative store.  The  union  thus  becomes  security  for  the  man, 
and  the  cooperative  store  presents  the  bill  to  the  union  and  the 
amount  is  taken  out  of  strike  funds  due  the  purchaser.  The 
Bloomington  society  has  rendered  such  aid  to  teamsters  and 
shopmen  out  on  strike.  In  the  first  quarter  of  its  operation  this 
store  did  a  total  business  of  $18,636.16,  while  its  business  now 
ranges  from  $30,000  to  $50,000  a  quarter. 

Generally  speaking,  the  cooperative  societies  in  Illinois  are 
operated  on  the  following  principles :  ( 1 )  Unrestricted  member- 
ship, with  shares  of  low  denomination,  usually  $5  or  $10,  which 
may  be  paid  for  on  the  installment  plan;  (2)  limitation  of  the 
number  of  shares  to  be  owned  by  any  one  member,  usually  to  five 
$5  shares  or  five  $10  shares;  (3)  one  member,  one  vote,  irre- 
spective of  the  number  of  shares  held;  (4)  the  sale  of  all  com- 
modities at  standard  prices,  and  nothing  but  first  class  goods 
offered  for  sale ;  (5)  cash  sales  whenever  possible,  with  extension 
of  credit  when  necessary,  to  about  three-fifths  of  the  value  of 
share  capital;  (6)  payment  of  not  more  than  the  legal  rate  of 
interest  on  share  and  loan  capital,  the  remainder  of  the  profits, 
after  providing  for  depreciation,  reserve,  and  educational  work, 
to  be  returned  as  a  dividend  to  members  in  proportion  to  their 
patronage. 

(c)  Cooperation  Among  the  Finns  and  Other  Racial  Groups 
in  America.  Among  the  most  strongly  established  cooperative 
movements  in  America  is  the  one  which  is  associated  with  the 
Finnish  Socialist  Party.  Here  one  finds  the  tradition,  spirit,  and 
loyalty  that  are  indispensable  to  successful  cooperation.  There 
are  over  150  cooperative  societies  among  the  Finns  in  this  coun- 
try, including  retail  stores,  mills,  bakeries,  boarding  houses,  pub- 
lishing houses,  creameries,  newspapers,  and  wholesale  houses. 
It  is  estimated  that  a  large  majority  of  the  200,000  Finns  in  this 
country  are  affiliated  with  the  cooperative  movement.  Local 
societies  are  established  by  socialist  groups  as  a  means  of  edu- 
cating the  Finns  in  certain  political  ideals. 


50  COOPERATION 

The  Cooperative  Central  Exchange  at  Superior,  "Wisconsin, 
which  is  among  the  most  successful  Finnish  societies,  is  dis- 
cussed later  in  this  bulletin.  The  Finnish  societies  of  Massachu- 
setts have  united  with  other  cooperative  associations  in  the  dis- 
trict to  form  a  wholesale  with  headquarters  at  Boston.  The  new 
association,  which  was  organized  in  1919,  is  known  as  the  New 
England  Cooperative  Wholesale,  and  is  composed  of  about  thirty 
cooperative  enterprises  to  which  it  sells  about  $2,000,000  worth 
of  goods  a  year.  Other  national  and  racial  groups  in  America 
are  conducting  cooperative  societies,  including  the  English, 
Scotch,  Hebrews,  Russians,  Italians,  Germans,  Poles,  Slovaks, 
and  Franco-Belgians.  At  the  1920  convention  of  the  Federation 
of  Jewish  Cooperative  Societies,  over  1,200  delegates  were  seated, 
representing  associations  that  are  operating  restaurants,  bak- 
eries, butcher  shops  and  agricultural  enterprises.® ^ 

Consumers'  Cooperative  Wholesale  Societies  in  the 

United  States 

If  the  history  of  cooperation  in  the  United  Kingdom  teaches 
any  definite  lesson,  it  is  that  no  cooperative  movement  can  be 
permanently  successful  without  unification  and  federation  of 
the  scattered,  isolated,  autonomous  units — ^the  retail  societies. 
These  retail  associations  are  the  cells  that  make  up  the  organism 
of  cooperation  in  any  country,  but  isolated,  disconnected  cells 
do  not  make  for  complete  organic  structure  and  function. 
Definite  intimate  relations  and  connections  must  be  established 
to  assure  growth  and  permanent  activity. 

The  Cooperative  League  of  America  has  estimated  that  in 
1920  there  were  about  3,000  consumers'  societies  in  the  United 
States,  with  a  total  membership  of  over  500,000,  representing 
with  their  families  2,000,000  persons,  and  a  combined  purchas- 
ing power  of  $200,000,000  annually.  The  total  capital  of  these 
societies  is  estimated  to  be  $15,000, 000.*^ 2  Adequate  statistical 
data  concerning  the  movement  in  America  are  not  available,  but 
there  is  every  reason  to  believe  that  these  estimates  are  approxi- 
mately correct. 

**Warbasse,  The  Cooperative  Consumers'  Movement  in  the  United  States, 
pp.  8,  9. 

^''Warbasse,  op.  cit.,  p,  5. 


STUDY  IN  CONSTRUCTIVE  ECONOMIC  REFORM  51 

Three  thousand  independent  cooperative  associations  are  at  a 
serious  economic  disadvantage  unless  there  obtains  some  agency 
to  cement  their  interests  and  promote  their  welfare.  Economy 
and  efficiency  in  the  purchasing  of  supplies  can  not  be  effected 
by  small,  independent,  disconnected  societies  doing  a  retail  busi- 
ness of  only  ordinary  size.  Eecognition  of  this  fact  led  to  the 
establishment  of  cooperative  wholesale  houses.  A  significant  step 
in  this  direction  was  taken  at  the  "First  American  Cooperative 
Convention"  held  in  Springfield,  Illinois,  September,  1918,  which 
provided  for  the  organization  of  the  National  Cooperative  Asso- 
ciation to  assume  charge  of  district  wholesale  houses  and  give 
unity  to  the  cooperative  movement. 

In  November,  1919,  the  National  Cooperative  Association 
began  operations  in  its  offices  and  warehouse  at  Chicago.  Branch 
wholesale  warehouses  were  established  in  Seattle,  Washington, 
and  Hoboken,  New  Jersey,  and  plans  have  been  formulated  for 
additional  wholesale  houses  at  Los  Angeles,  Kansas  City,  Denver, 
and  other  important  business  centers.  Besides  the  National  Co- 
operative Wholesale  Association  there  are  the  following  district 
wholesale  houses:  the  Cooperative  Wholesale  Company  of  San 
Francisco ;  the  Cooperative  Wholesale  Society  of  America  at  St. 
Paul;  the  Cooperative  Exchange  at  Superior,  Wisconsin;  the 
Central  States  Cooperative  Wholesale  Society  at  East  St.  Louis, 
Illinois;  the  Tri-State  Cooperative  Association  at  Pittsburgh, 
Pennsylvania;  the  Cooperative  Society  of  America  at  Chicago. 
In  the  cooperative  movement  among  farmers  several  wholesale 
societies  and  exchanges  exist,  which  increase  considerably  the 
total  number  of  cooperative  wholesale  organizations  in  America. 

1.  The  Composition  and  Functions  of  Cooperative  Whole- 
sale Societies.  Cooperative  wholesale  societies  are  organized  for 
several  reasons,  namely,  (1)  To  enable  consumers'  societies  to 
make  their  purchases  in  an  advantageous  manner  by  avoiding 
competition  among  themselves  in  the  open  market ;  (2)  to  defend 
cooperative  retail  societies  from  the  opposition  of  private  mer- 
chants who  bring  pressure  to  bear  upon  privately  owned  whole- 
sales to  prevent  the  latter  from  supplying  goods  to  cooperative 
stores;  (3)  to  eliminate  the  profits  of  the  commission  house, 
jobber,  and  wholesaler;  (4)  to  secure  the  economy  and  efficiency 
of  large  scale  buying.    The  establishment  of  cooperative  whole- 


52  COOPERATION 

sales  is  not  only  sound  business  but  is  economically  imperative 
if  the  cooperative  movement  is  to  succeed  permanently.  Coop- 
erative experience  the  world  over  has  demonstrated  this  fact. 

Cooperative  wholesales  in  the  United  States  are  conducted  on 
the  following  basis :  (1)  Membership  consists  of  cooperative  soci- 
eties and  clubs  having  the  Rochdale  ideal  or  something  akin  to  it, 
and,  sometimes,  of  individuals.  Exclusion  of  associations  desig- 
nated as  operated  for  profit  is  general.  (2)  Affiliating  societies 
are  required  to  invest  from  $100  to  $1,000  in  the  capital  stock 
of  the  wholesale,  the  amount  varying  with  the  size  of  the  local 
retail  association.  (3)  Administration  of  the  wholesales  is  en- 
trusted to  a  board  of  seven  or  nine  directors  elected  from  the 
membership  of  the  affiliated  societies.  Member  societies  deter- 
mine the  general  business  policies  of  the  wholesale  through  their 
representatives  or  delegates  at  conferences  held  for  this  pur- 
pose. (4)  Generally,  all  goods  are  sold  for  cash  at  current  whole- 
sale prices,  and  savings  are  returned  to  the  constituent  societies 
in  the  form  of  a  dividend  distributed  in  proportion  to  patronage. 
Sometimes,  as  in  the  case  of  the  Central  States  Wholesale,  short- 
time  credit  is  extended,  and  the  policy  of  selling  as  near  to  cost 
as  possible  is  adopted  for  the  purpose  of  meeting,  if  not  destroy- 
ing, local  retail  competition. 

There  is  a  marked  difference  between  American  wholesale 
societies  and  the  British  wholesales.  The  latter  are  federations 
of  distributive  retail  societies  which  are  essentially  independent, 
autonomous  units,  while  many  American  cooperative  wholesales 
have  a  tendency  towards  centralization,  conducting  both  whole- 
sale and  retail  activities,  with  final  control  of  retail  branches 
remaining  largely,  if  not  completely,  in  the  hands  of  the  whole- 
sale. This  is  true,  for  example,  of  the  Central  States  Cooperative 
Wholesale  Society  and  the  Cooperative  Society  of  America,  in 
both  of  which  the  retail  stores  are  organized  and  sustained  under 
direct  control  of  the  wholesale.  To  distinguish  it  from  the 
British  system  some  of  the  sponsors  of  this  type  of  organization 
have  named  it  the  ' '  American  Rochdale  Plan. '  '^^  The  Coopera- 
tive League  of  America  is  unalterably  opposed  to  this  tendency 

"'President  John  Walker  of  the  Illinois  State  Federation  of  Labor,  and 
Mr.  Eobert  McKeehan,  manager  of  the  Central  States  Wholesale,  are  prob- 
ably the  originators  of  this  name. 


STUDY  IN  CONSTRUCTIVE  ECONOMIC  REFORM  53 

towards  centralization  of  authority  and  control  in  the  hands  of 
the  wholesale  organizations,  while  prominent  leaders  in  Illinois 
see  in  it  the  hope  of  the  cooperative  movement  in  the  United 
States.  It  will  be  seen  from  data  already  presented  regarding 
cooperation  in  Illinois,  that  many  stores  which  began  their  careers 
on  the  English  Rochdale  plan  failed  and  were  taken  over  by  the 
Central  States  Cooperative  Wholesale  and  operated  successfully 
on  the  American  Rochdale  system. 

Like  the  wholesale  societies  of  the  United  Kingdom,  American 
cooperative  wholesales  perform  definite  educational  functions  in 
furnishing  information,  literature,  lectures,  stereopticon  slides, 
and  moving  pictures  relative  to  the  organization  and  operation 
of  cooperative  enterprises.  For  this  purpose  the  societies  appro- 
priate annually  from  savings  an  amount  ranging  up  to  ten  per 
cent  of  surplus  after  payment  of  interest  on  capital  stock.  Uni- 
form systems  of  accounting  and  bookkeeping  have  been  intro- 
duced by  the  various  organizations  with  very  satisfactory  results. 
In  the  case  of  the  Pacific  Cooperative  League  and  the  Tri-State 
Cooperative  Association  the  general  bookkeeping  and  auditing 
of  accounts  of  member  societies  are  done  at  the  central  office  of 
the  wholesale.  The  Cooperative  Wholesale  Society  of  America 
requires  its  member  societies  to  adopt  a  uniform,  prescribed  sys- 
tem of  accounting,  and  gives  them  the  privilege  of  having  their 
accounts  audited  by  the  wholesale  association.  The  Central 
States  Cooperative  Wholesale  merely  recommends  a  specified 
system  of  accounting,  which  is  generally  adopted  by  subsidiary 
societies,  while  the  Central  Exchange  does  not  designate  any 
special  system  of  bookkeeping,  but  merely  assists  the  retail  asso- 
ciations in  introducing  accounting  and  auditing  methods. 

American  wholesale  societies  have  recognized  the  sound  busi- 
ness practice  of  training  prospective  employees.  The  Tri-State 
Cooperative  Society  in  Pittsburgh  offers  courses  in  ' '  store  man- 
agement" and  the  "scientific  principles  of  cooperation,"  which 
deal  with  such  topics  as  the  general  nature  and  functions  of  co- 
operative enterprises,  cooperative  advertising,  personnel  admin- 
istration, principles  and  practice  of  accounting,  and  the  princi- 
ples of  efficient  management.  The  first  session  of  this  school  was 
held  from  January  30,  to  June  11,  1920.  The  Cooperative  Cen- 
tral Exchange  held  a  short  course  in  1919  and  1920  at  Superior, 


54  COOPERATION 

Wisconsin,  in  which  about  forty  students  were  enrolled.  The 
training  department  of  the  Cooperative  Society  of  America  has 
been  discussed  already. 

2.  The  National  Cooperative  WJiolesale  and  Its  Branches. 
The  National  Cooperative  Wholesale  Association  was  organized 
at  the  Cooperative  Congress  held  in  Springfield,  Illinois,  in  Sep- 
tember, 1918,  and  was  opened  for  business  in  November,  1919. 
The  society  is  incorporated  under  the  laws  of  Wisconsin,  for 
$1,000,000,  which  is  divided  into  10,000  shares  of  $100  each. 
Wisconsin  was  chosen  for  incorporation  because  the  cooperative 
laws  of  that  state  were  deemed  most  secure  and  favorable  to 
cooperative  concerns.  Membership  is  restricted  to  cooperative 
societies  organized  on  the  Rochdale  plan,  each  member  society 
being  required  to  subscribe  for  three  shares  for  each  one  hundred 
members  or  fraction  thereof.  For  every  500  members  the  soci- 
eties are  entitled  to  send  a  delegate  to  the  meetings  of  the  whole- 
sale association.  An  amendment  adopted  March  15,  1920,  pro- 
vides that  in  the  future  a  society  petitioning  for  membership 
shall  be  required  to  subscribe  to  the  wholesale  a  sum  equal  to 
25  per  cent  of  its  (the  petitioning  society)  capital  stock.  Trade 
unions,  farmers'  associations,  and  individuals  may  invest  in  loan 
capital. 

The  methods  of  administration  and  the  plan  of  development 
of  the  National  Cooperative  Wholesale  are  patterned  after  the 
Cooperative  Wholesale  Society  of  England,  with  its  federated 
relationship  of  the  retail  societies,  and  conducted  on  the  prin- 
ciples of  one  vote  to  each  member  regardless  of  the  number  of 
shares  held ;  payment  of  only  the  legal  rate  of  interest  on  stock 
shares ;  business  conducted  on  a  cash  basis  ' '  as  far  as  possible ' ' ; 
distribution  of  profits  in  proportion  to  patronage.®^ 

Full  control  and  administration  of  the  National  Cooperative 
Wholesale  is  vested  in  a  board  of  nine  directors  elected  by  the 
stockholders  for  a  term  of  three  years.  The  volume  of  business 
during  the  first  year  of  operation  approximated  $150,000.  It  is 
too  early,  however,  to  draw  any  conclusions  concerning  the  prob- 
able future  of  this  organization. 

3.  The  Pacific  Cooperative  League.  The  cooperative  move- 
ment   in    California    centers    around    the    Pacific    Cooperative 

**Pamplilet  of  the  National  Cooperative  Wholesale  Association,  p.  4. 


Study  in  constructive  economic  reform  55 

League,  with  headquarters  and  a  wholesale  company  at  San 
Francisco.  The  Rochdale  movement  was  initiated  in  California 
about  twenty  years  ago,  but  because  of  the  lack  of  mutual  sup- 
port, experience,  intelligence,  and  wholesale  facilities,  it  resulted 
in  failure.  In  1913  the  Pacific  Cooperative  League  was  organ- 
ized as  a  propaganda  and  sustaining  organization.^^  The  League 
organizes  chain  stores  in  California  and  neighboring  states  under 
the  "American  Chain  Store  Plan."  Membership  in  the  asso- 
ciation is  open  to  cooperative  stores,  organized  clubs,  firms,  and 
corporations  upon  the  payment  of  $5  entrance  fee,  $100  share 
capital,  and  $900  loan  capital.  Associate  membership  is  provided 
for  at  the  nominal  sum  of  $5,  which  entitles  individuals  to  the 
privilege  of  the  trading,  social,  and  educational  features  of  the 
League  without  the  assumption  of  liabilities.  Store  societies 
join  the  association  on  their  own  initiative,  but  insolvent  societies 
are  often  taken  over  "on  probation"  and  made  solvent  by  reason 
of  the  League's  direct  control  of  the  business  and  accounts. 
Stores  are  organized  by  the  League  only  when  and  where  interest 
in  cooperation  is  strong  enough  to  give  reasonable  assurance  of 
success.  The  requirements  are  that  in  the  average  community 
there  shall  be  200  members,  each  subscribing  from  $35  to  $50  for 
capital  and  the  expenses  of  organization.  From  $10,000  to 
$50,000  is  the  prescribed  range  of  original  capital,  but  $7,000 
is  often  accepted  as  sufficient  basis  for  the  organization  of  a  store 
society.  Once  organized,  this  store  is  given  local  autonomy  with 
power  to  make  its  own  by-laws,  elect  its  own  directors  and  a  rep- 
resentative to  serve  on  the  Central  Board  of  Delegates  of  the 
League.  The  affairs  of  the  association  are  administered  by  a 
Central  Board  of  Directors,  consisting  of  seven  members  elected 
from  the  delegates.  The  manager  of  the  retail  store  is  selected 
by  the  League.  After  fulfilling  the  requirements  of  the  League 
as  to  interest  on  shares  and  reserve,  and  educational  funds,  each 
store  is  privileged  to  declare  its  own  dividends  on  purchases. 

Membership  is  transferable  from  one  society  to  another,  and 
life  membership  entitles  an  individual  to  buy  direct  from  the 
nearest  wholesale  branch  at  wholesale  prices.  Such  a  member- 
ship is  granted  a  person  who  moves  from  the  vicinity  of  one  of 
the  association's  stores, 

"Warbasse,  op.  cit.,  p.  8. 


56  COOPERATION 

Expenses  are  required  to  be  paid  out  of  the  actual  earnings 
on  sales,  not  out  of  invested  capital,  and  a  centralized  system  of 
accounting  has  been  established  which  has  proved  only  one-third 
as  expensive  as  bookkeeping  by  the  separate  stores,  and  far  more 
efficient.  The  charge  made  by  the  association  for  this  service 
varies  with  the  amount  of  business,  the  fee  ranging  from  $15  to 
$50.  Audits  and  inventories  are  made  regularly  and  each  store 
society  holds  monthly  meetings.  The  wholesale  does  all  the  buy- 
ing for  the  League.  The  present  status  of  the  movement  is  indi- 
cated in  the  following  excerpt  from  a  letter  which  was  received 
from  the  League  on  March  14,  1921 : 

We  are  at  present  operating  47  cooperative  societies.  About  a  dozen 
more  are  preparing  to  open  for  business  in  the  near  future.  The  combined 
business  of  the  societies  is  now  about  $4,000,000  a  year.  The  membership 
is  approximately  15,000,  and  the  average  membership  per  store  is  300. 

The  Cooperative  Wholesale  Company  is  the  property  of  the  membership 
of  the  Pacific  Cooperative  Leagne.  At  present  only  about  a  fifth  of  the 
buying  of  the  societies  is  done  through  their  own  wholesale,  owing  to  the 
fact  that  many  of  them  are  so  far  distant.  As  rapidly  as  possible,  however, 
branches  of  the  wholesale  are  being  established  to  serve  the  more  distant."* 

The  League  operates  in  California,  Arizona,  and  New  Mexico. 
By  October  6,  1919,  there  were  branches  being  organized  in  32 
towns  of  California,  seventeen  of  which  had  a  total  membership 
of  3,600.  It  will  be  seen  from  the  above  letter  that  the  member- 
ship today  is  about  15,000,  which  indicates  rapid  growth.  The 
League  is  a  member  of  the  International  Cooperative  Alliance, 
and  acts  as  agent  for  the  English  Cooperative  Wholesale  and  the 
Eussian  Cooperative  Unions.  Ever  since  its  inception  the 
League  has  been  able  to  meet  all  financial  obligations  and  pay 
dividends,  none  of  its  stores  having  failed.  This  signal  success 
is  attributed  to  the  policy  of  close  federation  of  the  constituent 
societies,  which  amounts  really  to  amalgamation  and  extreme 
centralization  of  supervision  and  general  control. 

4.  The  Cooperative  Wliolesale  Society  of  America.  In  the 
autumn  of  1917  the  Cooperative  Wholesale  Society  of  America 
was  established,  with  central  offices  at  St.  Paul,  Minnesota.  The 
society  comprises  cooperative  associations  operating  in  the 
Dakotas,  Montana,  and  Minnesota.    The  original  capitalization  of 

Trom  a  letter  to  the  author  written  by  Alanson  Sessions,  Education 
Department,  Pacific  Cooperative  League,  March  14,  1921. 


STUDY  IN   CONSTRUCTIVE  ECONOMIC  REFORM  57 

$10,000  was  increased  to  $100,000  in  May,  1918,  and  to  $1,000,000 
in  July,  1918.  Membership  in  the  society  is  open  to  all  coopera- 
tive organizations  operating  on  the  Rochdale  plan,  cooperative 
corporations,  and  unincorporated  cooperative  societies,  on  the 
basis  of  the  purchase  of  $1,000  worth  of  capital  stock.  Affiliated 
organizations,  about  28  in  all,  include  producers'  and  consumers' 
societies,  prominent  among  which  are  farmers'  organizations. 
The  combined  membership  of  these  societies  is  estimated  to  be 
from  4,000  to  5,000. 

Current  wholesale  prices  are  charged,  and  surplus  earnings, 
after  meeting  requirements  for  reserve  and  educational  funds  are 
returned  to  members  in  proportion  to  their  purchases  and  to 
employees  as  a  sort  of  bonus  on  wages.  Non-members  receive 
one-half  the  rate  of  dividend  paid  to  members,  according  to  the 
English  practice.  The  society  performs  the  dual  function  of 
purchasing  for  consumers  and  selling  for  producers  through  its 
buying  and  marketing  departments,  which  are  separately  main- 
tain3d.  Marketing  farm  produce  constitutes  a  very  important 
part  of  the  society 's  work.  Although  the  Cooperative  Wholesale 
Society  of  America  maintains  an  organization  department  it  does 
not  establish  stores  except  upon  request  from  the  members  of  a 
locality  desiring  a  store,  nor  does  it  make  any  effort  to  induce 
cooperative  societies  to  affiliate  with  the  wholesale.  Member 
associations  must  (1)  have  a  certain  minimum  of  capital,  (2)  sign 
a  contract  to  purchase  all  their  supplies  through  the  cooperative 
wholesale,  and  (3)  conduct  their  business  on  a  cash  basis. 

5,  The  Cooperative  Central  Excliange.  In  July,  1917,  a  con- 
ference of  15  Finnish  cooperative  stores  held  at  Superior,  Wis- 
consin, organized  the  Cooperative  Central  Exchange.  The  con- 
stituent societies  of  this  wholesale  association  are  located  in 
Northern  Minnesota,  Wisconsin,  and  Michigan.  The  Exchange 
is  thus  only  a  little  more  than  three  and  a  half  years  old,  but 
ever  since  its  inauguration  it  has  grown  steadily  in  membership 
and  volume  of  business.  The  increase  in  the  number  of  coopera- 
tive societies,  including  stores  and  buying  clubs,  affiliated  with 
the  wholesale  is  indicated  by  the  following  data:^'^ 

"All  data  relative  to  the  Exchange  presented  in  this  bulletin  are  com- 
piled from  the  reports  of  the  Exchange  mailed  to  the  author  in  March,  1921. 


58 


COOPERATION 

Year 

Society  Membership 

1917 

15 

1918 

27 

1919 

40 

1920 

48 

In  addition  to  the  regular  member  societies  some  societies  are 
listed  as  purchasing  supplies  through  the  Exchange. 

The  capital  stock  which  member  societies  have  invested  in  the 
Cooperative  Central  Exchange,  and  the  sales  of  the  Exchange 
are  given  as  follows : 

Tear  Capital  Invested  Sales 

1917  $     480.00  $  25,573.62  (three  months) 

1918  4,020.00  132,423.00 

1919  6,940.00  313,663.88 

1920  10,890.31  407,373.84 

It  would  seem  from  the  foregoing  information  that  the  Ex- 
change, which  is  the  only  cooperative  wholesale  society  in  the 
important  district  at  the  head  of  the  Great  Lakes  is  destined  to 
become  an  important  agency  in  the  American  cooperative  move- 
ment. The  net  gain  recorded  by  the  wholesale  in  1919  was 
$7,330.21,  and  in  1920,  $6,798.43.  In  1921,  $4,454  will  be  dis- 
tributed in  the  form  of  shares  among  member  associations.  Of 
the  total  net  gain  in  1920,  $2,600  was  distributed  to  member 
societies  in  proportion  to  their  purchases,  the  remainder  being 
transferred  to  the  resei've  fund. 

In  October,  1918,  the  Cooperative  Central  Exchange  pur- 
chased at  the  cost  of  $22,000,  a  three-story  brick  building  in  an 
excellent  part  of  the  business  district  of  Superior,  and  in  Octo- 
ber, 1919,  the  society  opened  in  this  building  a  bakery  with  two 
modern  ovens  costing  about  $10,000.  The  bakery  is  the  first 
and  so  far  the  only  productive  establishment  operated  by  the 
Exchange.  This  establishment  employs  nine  persons,  and  pro- 
duces toast,  hardtack,  bread,  biscuits,  and  cookies.  The  sales  of 
the  bakery  averaged  $4,028.54  per  month  for  the  first  nine 
months  of  1920.  At  the  present  time,  (March,  1921)  the  Ex- 
change is  planning  to  take  over  the  milk  distributing  business  and 
the  creamery  of  the  Central  Cooperative  Creamery  Association, 
located  in  Superior  and  doing  a  business  of  $100,000  a  year.  This 
association  consists  of  cooperative  societies  that  are  already  mem- 
bers of  the  Cooperative  Central  Exchange. 


STUDY  IN   CONSTRUCTIVE  ECONOMIC   REFORM  59 

A  very  important  phase  of  the  activities  of  the  Exchange  is 
its  educational  work  along  cooperative  lines.  The  following 
excerpt  from  the  report  of  the  society  indicates  the  scope  and 
success  of  these  efforts. 

In  the  summer  of  1918  the  Exchange  organized  a  course  which  lasted 
one  week  and  which  was  attended  by  fifteen  students.  At  this  course  book- 
keeping was  the  only  subject  taught. 

In  the  summer  of  1919  the  course  was  extended  to  four  weeks  and 
was  attended  by  43  students  from  Minnesota,  Wisconsin,  and  Michigan. 
At  this  course  different  phases  of  cooperation  were  taught  besides  book- 
keeping, which  still  remained  the  main  subject. 

In  1920,  during  the  months  of  September  and  October  a  similar  course 
was  arranged  lasting  this  time  for  six  weeks  and  being  attended  by  34 
students,  men  and  women,  some  of  them  coming  as  far  as  from  the  state 
of  New  York  and  from  Canada. 

In  1921  a  similar  course  will  be  arranged  in  the  fall. 

These  courses  have  proved  a  very  important  factor  in  training  for  the 
cooperative  stores  bookkeepers,  clerks  and  managers,  who  know  something 
about  cooperation  and  will  be  loyal  to  the  movement.** 

At  the  third  annual  meeting  of  the  Exchange,  held  in 
Superior,  February,  1920,  a  resolution  was  passed  providing  for 
an  educational  department  to  be  operated  in  connection  with  the 
wholesale.  This  department  is  in  charge  of  an  Educational  Di- 
rector. Last  year  the  department  was  supported  by  an  educa- 
tional tax  of  50  cents  per  member,  which  every  afftliated  society 
had  to  pay  into  the  treasury  of  the  Exchange.  At  the  fourth 
annual  meeting  of  the  Exchange,  held  in  Superior,  March  4-5, 
1921,  this  tax  was  modified  to  include  one  tenth  of  one  per  cent 
of  the  net  annual  sales  of  each  affiliated  society.  It  is  estimated 
that  for  this  year  $2,000  will  be  derived  from  this  source  for  edu- 
cational work.  In  addition,  the  recent  conference  voted  to  trans- 
fer $1,107.24  from  this  year's  surplus  to  the  educational  fund, 
from  which  scholarships  are  to  be  given  to  students  who  have 
been  active  in  the  cooperative  movement  and  who  wish  to  attend 
the  fall  session  in  1921.69 

At  present  the  Cooperative  Central  Exchange  has  about  5,000 
members.  Most  of  the  affiliated  societies  are  located  in  Northern 
and  Northeastern  Minnesota,  the  Upper  Peninsula  of  Michigan, 

'■•Report  of  the  Cooperative  Central  Exchange,  1921,  p.  2. 
•"From  a  letter  written  by  Mr.  Severi  Alanni,  of  the  Educational  De- 
partment of  the  Exchange,  to  the  author,  March,  8,  1921. 


60  COOPERATION 

Northern  Wisconsin,  and  Illinois,  the  largest  number  being  situ- 
ated in  Minnesota  and  only  one  in  Illinois  (at  Waukegan).  The 
financial  statement  of  the  Exchange  for  1920  showed  total  assets 
of  $72,548.10,  and  total  liabilities  of  a  similar  amount,  including 
capital,  surplus,  and  undivided  profits  amounting  to  $21,911.67. 

Affiliation  with  the  Exchange  is  left  entirely  to  the  initiative 
of  the  local  cooperatives,  although  the  work  of  the  educational 
department  undoubtedly  exercises  wide  influence  in  this  regard. 
Any  cooperative  society  or  organization  conducting  business  on 
generally  accepted  principles  of  cooperation  is  eligible  for  mem- 
bership in  the  Exchange.  Each  affiliated  society  is  required  to 
take  out  at  least  one  share  in  the  Exchange,  the  face  value  of 
which  is  $100.  If  the  membership  of  any  affiliated  society  ex- 
ceeds 25,  an  additional  share  must  be  taken,  and  in  case  the  mem- 
bership is  higher  than  50,  one  additional  share  to  every  25  mem- 
bers must  be  subscribed.  The  bookkeeping  system  of  member 
societies  must  conform  to  the  regulations  of  the  wholesale,  and  all 
accounts  are  open  to  examination  by  the  authorized  representa- 
tive of  the  Exchange.  After  making  all  reservations  necessary  to 
safeguard  and  promote  its  business,  the  Exchange  pays  not  more 
than  6  per  cent  interest  on  the  paid-in  capital  stock.  Control  of 
the  wholesale  association  is  vested  in  a  board  of  nine  directors, 
while  administrative  policies  are  carried  out  by  the  executive 
committee,  comprising  the  officers  of  the  society — the  president, 
the  secretary,  the  treasurer,  and  two  additional  members  selected 
by  the  Board  of  Directors.  The  details  of  administration  are 
looked  after  by  a  management  committee  of  three  members  of 
the  Board  of  Directors,  chosen  by  the  Board  to  serve  for  one 
year."^*^ 

Upon  application,  the  Exchange  extends  aid  to  persons  who 
wish  to  organize  a  cooperative  store.  Unlike  some  other  Ameri- 
can cooperative  wholesales,  the  Cooperative  Central  Exchange 
does  not  require  affiliated  societies  to  purchase  all  their  supplies 
through  the  wholesale,  although  it  expects  them  to  buy  through 
the  wholesale  whenever  it  is  possible  through  this  agency  to  pur- 
chase direct  from  producers  and  manufacturers. 

6.  Tlie  Tri-State  Cooperative  Association.  The  Tri-State 
Cooperative  Association  functions  both  as  a  wholesale  and  a 

"By-laws  of  the  Cooperative  Central  Exchange,  pp.  2-10. 


STUDY  IN  CONSTRUCTIVE  ECONOMIC  REFORM  61 

retail,  having  about  22  retail  branch  stores  in  western  Pennsyl- 
vania, eastern  Ohio,  and  northern  West  Virginia.  Ownership 
of  these  stores  is  vested  in  the  collective  membership  of  the  asso- 
ciation, and  their  management  is  placed  in  the  hands  of  the  Tri- 
State  Board  of  Directors,  officers,  and  central  operating  force, 
assisted  by  local  committees.  Except  when  the  wholesale  depart- 
ment is  unable  to  supply  their  needs,  all  branch  stores  must  buy 
their  supplies  through  it.  Local  stores  are  organized  only  upon 
the  request  of  10  or  more  families  in  any  locality.  Each  store 
is  entitled  to  send  two  delegates  to  the  quarterly  meetings  of  the 
association. 

Two  kinds  of  stock  are  issued  by  the  Tri-State,  namely,  ' '  per- 
manent ' '  stock  which  pays  interest  at  the  rate  of  6  per  cent,  and 
"ordinary"  stock  which  pays  5  per  cent.  The  latter  may  be 
withdrawn  on  90  days'  written  notice  to  the  Board  of  Directors, 
Membership  in  the  association  may  be  acquired  by  the  payment 
of  a  fee  of  $1.00  and  the  purchase  of  at  least  five  $10  shares, 
two  of  which  must  be  permanent  stock. 

Stores  that  have  already  been  established  may  affiliate  with 
the  Tri-State  by  accepting  the  latter 's  stock  for  the  value  of  the 
net  assets  of  such  stores.  Local  societies  desiring  affiliation  must 
have  a  minimum  membership  of  100  and  a  capital  of  $5,000,  and 
the  stock  issued  to  each  member  must  consist  of  2  shares  of 
permanent  and  3  shares  of  ordinary  stock.  These  stores  may 
surrender  affiliation  upon  a  majority  request  of  their  member- 
ship and  the  authorization  by  all  the  members  of  release  and 
transfer  of  ordinary  stock  to  the  local  society.  Membership  in 
the  wholesale  may  be  secured  by  independent  stores  upon  the 
purchase  of  $200  worth  of  permanent  stock.  At  present,  over 
20  independent  stores  are  affiliated  with  the  wholesale. 

The  retail  department  is  operated  as  a  unit  and  a  uniform 
dividend  is  returned  to  all  local  societies  irrespective  of  their  sav- 
ings. A  bonus  is  paid  to  employees  on  their  salarie^^  at  the  same 
rate  as  the  dividend.  Earnings  of  the  wholesale  are  distributed 
among  retail  stores  on  the  basis  of  patronage.  Steps  have  been 
taken  recently  to  separate  the  wholesale  and  retail  departments 
and  to  secure  a  separate  charter  for  the  latter. 

7.  The  Central  States  Cooperative  Wholesale  Society.  The 
cooperative  movement  in  central  and  southern  Illinois  is  directed 


62  COOPERATION 

largely  by  the  Central  States  Cooperative  Wholesale  Society, 
organized  in  March,  1915.  The  wholesale  warehouse  of  this  asso- 
ciation was  established  in  1919,  and,  under  the  able  management 
of  Mr.  Robert  McKechan,  has  had  a  successful  career.  In  the 
beginning  the  society  was  a  very  modest  agency  doing  the  col- 
lective buying  for  its  members,  but  as  early  as  1917  the  members 
were  convinced  that  the  organization  of  a  cooperative  wholesale 
department  is  a  vital  determinant  of  successful  cooperation."^! 
From  its  inception  the  society  has  received  the  sujjport  of  or- 
ganized labor,  chiefly  the  miners'  locals,  and  it  is  for  all  prac- 
tical purposes  an  adjunct  to  the  labor  movement  in  Illinois. 

The  Central  States  Cooperative  Wholesale  has  increased  its 
original  capital  of  $300  to  a  paid-in  share  capital  of  $130,000 
and  a  loan  capital  of  $25,000.  The  original  maximum  limit  for 
capital  stock  issues  was  set  at  $50,000,  divided  into  500  shares  of 
$100  each.  Rapid  expansion  of  business  operations  led  to  a 
larger  capitalization,  and  the  present  plans  are  to  have  ultimately 
a  capital  of  $500,000.  No  affiliating  society  or  individual  can 
hold  more  than  five  shares  of  capital  stock,  which  are  $100  each. 
There  is  apparently  no  limit  on  the  amount  of  loan  capital  that 
may  be  owned.  On  both  share  and  loan  capital  an  interest  rate 
of  5  per  cent  is  paid  annually.  In  subscribing  for  shares  three 
must  be  paid  for  at  once,  while  the  balance  must  be  paid  for 
within  one  year.'^^ 

Management  of  the  wholesale  society  is  vested  in  a  Board  of 
Directors  of  ten  members,  elected  at  the  annual  convention,  for  a 
term  of  one  year.  Each  member  has  but  one  vote  and  voting  by 
proxy  is  prohibited.  The  actual  work  of  running  the  wholesale 
is  done  by  a  manager  who  has  rather  liberal  authority.  Mr. 
Robert  McKechan,  manager  of  the  wholesale,  stated  on  March  9, 
1921,  that  there  are  now  sixty  mining  cooperative  stores  in 
operation,  directly  supervised  by  the  wholesale,  while  there  are 
twenty-five  regular  Rochdale  stores  which  are  connected  with  and 
do  some  of  their  buying  through  this  agency. '''^  Many  stores  that 
have  failed  under  the  Rochdale  system  have  been  taken  over  and 

"''^Proceedings  of  the  Third  Annual  Convention  of  the  Central  States 
Cooperative  Society,  September,  1917,  p.  8. 

"See  the  constitution  of  the  Central  States  Wholesale  Society, 
^^n  a  letter  to  the  author,  March  9,  1921. 


STUDY  IN   CONSTRUCTIVE  ECONOMIC  REFORM  63 

operated  successfully  under  the  supervision  of  the  wholesale, 
located  at  East  St.  Louis,  Illinois.  Where  trade  unions  have 
requested  it,  the  wholesale  society  has  established  stores  and  re- 
tained strict  control  of  them.  As  already  suggested,  the  society 
itself  is  owned  and  controlled  directly  by  the  miners '  unions. 

In  establishing  local  societies  the  association  specifies  no 
definite  membership  or  capital,  but  advises  that  there  be  40  or 
50  members  contributing  at  least  $50  each.  Each  manager  of 
the  stores  directly  controlled  by  the  wholesale  must  make  weekly 
reports  of  sales,  over-head  expenses,  and  other  items  of  business. 
Frequently  special  conferences  of  managers  are  held  at  the 
wholesale  headquarters  to  discuss  business  methods  and  policies. 
All  these  branch  stores  must  purchase  their  supplies  through  the 
wholesale,  except  in  the  case  of  local  produce  or  when  the  society 
can  not  fill  the  order.  The  amount  of  dividend  to  be  returned  by 
each  local  society  is  left  to  the  individual  society.  Dividends 
are  not  a  big  item  since  few  of  these  stores  are  operated  on  the 
pure  Rochdale  plan.  Most  of  them  are  operated  on  the  "cost 
plus"  system,  under  which  goods  are  sold  at  cost  plus  a  small 
percentage  estimated  to  cover  expenses.  This  is  true  of  both  the 
wholesale  and  the  retail  societies.  Such  a  plan  makes  possible 
active  competition  with  local  merchants  even  to  the  extent  of 
undercutting  their  prices.  This  is  done  to  secure  trade,  and 
grows  out  of  the  conviction  of  the  leaders  of  the  Central  States 
Cooperative  Wholesale  that  the  interest  of  the  American  people 
in  cooperation  can  best  be  enlisted  by  giving  them  dividends  in 
the  form  of  low  prices.  Two  per  cent  profit  on  gross  sales  has 
been  set  by  the  society  as  the  desired  margin. '^^ 

At  their  regular  meeting  held  in  East  St.  Louis,  Illinois, 
April  18,  1920,  the  Board  of  Directors  adopted  the  following 
rules  of  administration  for  "American  Eochdale  Stores":  (1) 
The  Board  of  Directors  shall  be  composed  of  a  duly  elected  i-epre- 
sentative  from  each  local  union  holding  stock  in  the  local  store ; 
(2)  the  Board  of  Directors  shall  meet  not  less  than  once  a  month, 
and  shall  elect  a  president,  vice-president,  secretary-treasurer, 
and  a  committee  to  supervise  the  business  of  the  society ;  (3)  the 
manager  shall  not  be  eligible  to  serve  in  official  capacity  and 

'*E€gulations  adopted  by  the  Board  of  Directors  at  the  regular  monthly 
meeting  in  E'ast  St.  Louis,  April  18,  1920. 


64 


COOPERATION 


shall  hold  no  vote  on  business  matters ;  (4)  two  per  cent  shall  be 
retained  from  gross  sales,  and  shall  be  turned  over  weekly  to  the 
secretary-treasurer,  the  said  two  per  cent  to  cover  expenses  of 
operation  and  profit;  (5)  the  local  board  and  the  Central  States 
Wholesale  shall  have  power  to  vote  and  supply  equipment  and 
goods  for  local  stores.''^  The  strictest  supervision  by  the  whole- 
sale is  provided,  and  is  actually  exercised  by  the  manager,  who 
requires  prompt  weekly  returns  from  each  local  store  and  insists 
on  a  low  expense  of  operation. 

The  sales  mark  set  by  the  manager  of  the  wholesale  for  1920 
was  $3,000,000.  This  goal  was  exceeded  by  $600,000.  In  1919, 
the  first  year  of  its  existence,  the  wholesale  society  created  from 
its  surplus  a  reserve  of  $18,000,  and  today  claims  a  total  of 
$300,000  capital  resources.'^^  The  following  data  indicate  the 
amount  of  business  done  by  the  retail  stores.''"^ 


Week 

No.  of 

Aggregate 

Approxi- 

Percentage 

Average 

ending 

stores 

sales 

mate 

range  of 

percent- 

report- 

average 

operating 

age  of 

ing 

sales 

expenses 

operating 
expense 

March  6, 

1920.. 

20 

$26,375.23 

$1,319 

4%  - 11% 

7%% 

March  20 

,   1920. 

25 

36,178.68 

1,500 

3%  - 13% 

6%% 

March  31 

,   1920. 

25 

24,376.54 

1,000 

5% -23% 

9% 

April   19, 

1920.. 

27 

29,914.63 

1,100 

4%  - 14% 

7% 

April  24, 

1920.. 

29 

40,189.11 

1,400 

4%  - 10% 

5% 

The  sales  and  expenses  for  other  weeks  in  1920  were  about 
the  same  as  the  above,  which  suggests  that  the  weekly  turnover 
of  the  retail  stores  averages  from  $1,000  to  $2,000,  and  operating 
expenses  about  7  per  cent  on  the  weekly  turnover.  During  the 
last  three  months  of  1920  and  the  first  quarter  of  1921,  the  whole- 
sale did  a  business  of  $1,500,000.  This  would  undoubtedly  have 
been  much  larger  except  for  prevailing  unemployment.     The 

"Proceedings,  issued  April  20,  1920. 

■"Warbasse,  The  Cooperative  Consumers '  Movement  in  the  United  States, 
1920  edition,  p.  7. 

■"Compiled  from  wholesale  manager 's  weekly  circulars  relative  to  sales 
and  expenses  of  operation  of  the  retail  stores. 


STUDY  IN   CONSTRUCTIVE  ECONOMIC   REFORM  65 

wholesale  pays  4  per  cent  per  annum  on  all  share  and  loan 
capital,  and  retains  a  reserve  fund  of  not  less  than  one  per  cent 
of  the  net  surplus.  Profits  are  distributed  among  members  in 
proportion  to  patronage,  but  before  any  division  of  earnings  is 
made  deductions  must  be  made  for  expenses  of  operation,  in- 
terest, depreciation,  and  reserve  fund.  In  theory  goods  are  to 
be  sold  for  cash,  but  in  actual  practice  credit  is  widely  extended 
upon  the  approval  of  the  Board  of  Directors.  Where  no  retail 
cooperative  store  exists  orders  are  solicited  from  local  union 
stockholders.  In  the  case  of  a  strike,  shut-down,  or  lockout,  the 
Board  of  Directors  may  direct  the  manager  to  sell  at  cost  to 
local,  sub-district,  district,  national,  central,  or  international 
unions  holding  stock  in  the  society,  upon  the  request  of  such 
bodies.  No  profit  is  exacted  on  such  sales  until  the  request  is 
withdrawn  or  the  distress  is  ended.  Where  non-members  are 
on  strike  or  lockout  these  privileges  may  be  granted  at  the  dis- 
cretion of  the  Board  of  Directors. 

Summary  of  the  Recent  Growth  of  Cooperation  in 
Certain  Countries'^^ 

In  every  important  country  in  Europe  cooperation  has  pro- 
gressed rapidly  since  1914,  and  in  many  countries  that  have  been 
torn  with  civil  and  international  wars  and  social  revolutions  the 
cooperatives  have  appeared  as  the  most  constructive  agencies 
in  economic  and  social  life.  There  is  room  here  only  for  the 
briefest  resume  of  these  significant  advances  of  cooperation.  In 
1919  the  19  leading  cooperative  wholesales  of  Europe  had  a  total 
volume  of  sales  amounting  to  $1,047,538,645,  while  10  leading 
retail  societies  had  a  total  turnover  of  $141,549,160. 

1.  Austria.  Prior  to  the  war  the  Central  Union  of  Austrian 
Consumers'  Societies  included  about  500  societies  with  a  total 
membership  of  $370,000,  and  an  annual  turnover  aggregating 
approximately  $33,000,000.  As  a  consequence  of  the  great  war 
Austria  has  been  reduced  to  a  minor  European  state,  and  the  old 
Central  Union  of  Austrian  Consumers'  Societies  has  become  the 
Central  Union  of  German  Austrian  Consumers'  Societies,  func- 
tioning in  a  much  less  extensive  manner.     The  post-war  status 

"Most  of  the  data  on  these  countries  are  oonipilpd  fiom  the  rejiorts  of 
the  English  Cooperative  Wholesale  Society,  especially  the  Year  Book. 


66  COOPERATION 

of  the  Union  is,  therefore,  not  so  promising  as  its  condition  in 
pre-war  days.  The  Union  includes  112  consumers'  societies,  17 
building  and  dwelling  societies,  17  productive  associations,  4 
credit  associations,  4  regional  federations,  3  purchasing  federa- 
tions, 1  wholesale  and  1  insurance  society.  Of  the  112  consumers' 
societies  in  1919,  103,  with  a  membership  of  370,866,  reported 
collective  sales  of  $119,327,350. 

The  cooperative  wholesale  business  is  taken  care  of  by  the 
Wholesale  Society  of  Consumers'  Societies  Ltd.,  which,  although 
a  distinct  organization  from  the  Union,  is  controlled  by  a  common 
board  of  directors.  In  1919  the  turnover  of  the  Wholesale  So- 
ciety amounted  to  approximately  $145,000,000.  The  enormous 
increase  in  the  aggregate  value  of  annual  sales,  which  reflects  the 
unprecedented  inflation  of  prices  in  recent  years,  is  seen  from 
the  following  data: 

1914 $  5,583,780 

1916 10,435,995 

1918 30,641,195 

1919 145,833,330 

It  is  an  achievement  worthy  of  note  that  the  Union  has  more 
than  regained  its  pre-war  collective  membership,  despite  the  loss 
of  a  large  number  of  societies  through  disruption  of  the  Empire. 
Although  less  comprehensive  in  the  field  of  its  operations,  the 
Union  has  become  more  consolidated  under  the  stress  of  the  seri- 
ous conditions  incident  to  the  war,  and  apparently  faces  a  success- 
ful future. 

2.  Belgium.  The  fundamental  principle  of  cooperation  in 
Belgium  is  unique  in  that  surplus  savings  are  used  for  social 
welfare  purposes  rather  than  being  returned  as  dividends  to 
members.  These  social  welfare  activities  include  old  age  pensions, 
life  insurance,  insurance  against  sickness  and  unemployment, 
maternity  benefits,  and  medical  and  nursing  care.  Community 
centers  called  "the  houses  of  the  people"  are  owned  by  the  co- 
operative societies,  and  are  used  for  meetings,  dramatics,  schools 
and  recreation.  Sometimes  these  centers  are  surrounded  by 
parks.  ''The  Maison  du  Peuple  in  each  district  is  the  sjnnbol 
of  the  triple  alliance  of  the  cooperators,  socialists,  and  trade 


STUDY  IN   CONSTRUCTIVE  ECONOMIC  REFORM  67 

unionists — three   movements   which   have   grown,    trained   and 
organized  together.  "'^^ 

In  1912  the  Federation  of  Belgian  Cooperative  Societies  (La 
Federation  des  Societes  Cooperatives  beiges)  comprised  205 
societies,  with  a  collective  membership  of  170,748,  and  aggre- 
gate sales  of  about  $9,514,715.  The  Federation  comprised  two- 
thirds  of  the  members  and  three-fourths  of  the  turnover  of  all 
the  cooperative  associations  in  Belgium.  General  data  for  later 
years  will  not  be  available  until  the  issue  of  the  new  census 
by  the  Belgian  Cooperative  Office.  There  has  been  an  amalgama- 
tion or  federation  of  forces  in  several  districts.  The  Union  Co- 
operative de  Liege,  an  association  of  50  societies,  had  a  turnover 
in  1919  amounting  to  $7,000,000,  while  Les  Magasins  Generaux 
at  Philippeville,  an  amalgamation  of  11  societies,  had  a  turnover 
of  $2,000,000.  Other  district  fusions  indicate  similar  growth. 
The  wholesale  operations  reported  by  the  Federation  of  Belgian 
Cooperative  Societies  for  the  period  since  1913  show  excellent 
progress.    They  are : 

Value  of  Annual  Turnover 

1913 $2,310,185 

1914 1,083,000 

1915 400,000 

1919 3,173,855 

In  addition  to  the  distributive  functions  many  productive 
works  have  been  planned,  some  of  which  have  been  purchased 
already. 

3.  CzecliO'Slovakia.  The  cooperative  distributive  societies 
in  this  new  republic  are  said  to  number  between  2,000  and  2,500 
altogether,  including  the  German  societies — a  separate  racial 
group — which  in  1919  consisted  of  285  societies.  In  1919  the 
reports  of  194  of  the  latter  societies  showed  a  membership  of 
182,236,  and  a  collective  sales  amounting  to  about  $34,654,545. 
The  wholesale  operated  by  these  German  societies  showed  a  turn- 
over of  $28,330,000  for  the  first  nine  months  of  1919,  and  about 
$15,000,000  for  the  first  five  months  of  1920. 

The  recent  growth  of  the  Central  Union  of  Czccho-Slovak 
Cooperative  Societies  in  Prague  is  shown  by  the  fact  that  whereas 
in  1914  there  were  285  affiliated  societies,  with  a  total  member- 

'"Agnes  D.  Warbasse,  The  Story  of  Cooperation,  p.  9. 


68  COOPERATION 

ship  of  71,405  and  a  total  turnover  of  $5,555,160,  the  member- 
ship of  societies  in  1919  was  708,  total  membership  reached 
300,000,  and  total  sales  $68,750,000.  The  statistics  of  the  co- 
operative wholesale  identified  with  the  Union  showed  a  turnover 
of  $674,670  in  1914  and  $60,465,510  in  1919. 

4.  Denmark,  Norway,  and  Sweden.  In  no  country  of  sim- 
ilar size  has  cooperative  enterprise  been  more  successful  than  in 
Denmark  which  leads  the  world  in  the  number  of  cooperators  in 
proportion  to  population.  Her  cooperative  agricultural  purchase 
and  sales  societies,  dairies,  bacon  factories,  and  slaughter  houses 
are  known  everywhere  as  excellent  associations.  The  official  cen- 
suses show  that  in  1914  there  were  1,470  cooperative  distributive 
societies  with  a  collective  membership  of  244,000,  and  an  annual 
turnover  of  $28,611,110,  while  in  1919  there  were  1,690  such 
societies  with  a  total  membership  of  317,000  and  a  turnover  of 
$41,666,665,  which  indicates  an  increase  of  220  in  the  number 
of  societies,  73,000  in  total  membership,  and  $13,055,555  in  sales. 

The  Danish  Wholesale  Society,  whose  affiliated  societies  com- 
prise seven-tenths  of  the  distributive  cooperation  in  Denmark, 
had  in  1914  an  affiliated  society  membership  of  1,407,  with 
219,492  individual  members,  and  total  sales  of  $19,330,230.  In 
1919  there  were  1,604  affiliated  societies,  a  collective  membership 
of  250,224,  and  total  sales  of  $36,424,135.  Productive  enter- 
prises operated  by  the  Wholesale  include  hosiery,  ready-made 
clothing,  bicycles,  soap,  rope,  margarine,  mustard,  chocolate,  and 
sweetmeat  manufactures.  The  society  also  o^^^ls  seed-testing  and 
seed-growing  grounds.  The  value  of  commodities  from  these 
productive  operations  in  1914  was  $4,905,945,  while  in  1919  it 
was  $7,672,070. 

The  Danish  Cooperative  Bank  operates  as  a  central  organiza- 
tion for  cooperative  savings  and  loan  banks  in  Denmark,  of  which 
there  are  about  70  with  limited  liability.  The  Bank  has  over  100 
branches,  and  its  total  business  increased  from  $256,945,000  in 
1915  to  $2,222,000,000  in  1919. 

The  two  other  Scandinavian  countries,  Norway  and  Sweden, 
have  also  had  substantial  progress  along  cooperative  lines  in  re- 
cent years.  The  statistics  of  the  Cooperative  Union  of  Norway 
show  that  in  1914  there  were  149  societies,  a  total  membership  of 
31,000,  and  total  sales  of  $2,783,220,  while  in  1919  there  were  294 


STUDY  IN  CONSTRUCTIVE  ECONOMIC  REFORM  69 

societies,  a  total  membership  of  80,000,  and  a  turnover  of 
$19,782,000.  This  indicates  an  increase  of  97  per  cent  in  the 
number  of  affiliated  societies,  and  158  per  cent  in  the  collective 
membership.  Wholesale  distributive  operations  increased  from 
$860,275  in  1914  to  $3,350,930  in  1919.  The  productive  opera- 
tions of  the  Wholesale  comprise  the  manufacture  of  margarine 
and  tobacco,  and  coffee  roasting.  The  output  of  the  tobacco 
factory  in  1919  amounted  to  $300,000,  as  compared  with  $92,625 
in  1918,  while  the  production  of  the  margarine  factory  increased 
50  per  cent  in  1919. 

In  1913  the  Swedish  Cooperative  Union,  which  is  an  associa- 
tion of  four-fifths  of  the  distributive  cooperative  societies  in 
Sweden,  had  560  affiliated  societies,  with  a  collective  membership 
of  103,369  for  409  of  these  societies  giving  returns,  and  a  total 
sales  of  $9,086,340.  In  1916  there  were  785  affiliated  societies,  of 
which  737  reported  a  collective,  membership  of  169,063  and  a 
total  turnover  of  $22,683,835.  The  statistics  for  1919  show  916 
societies,  of  which  879  reported  an  aggregate  membership  of 
225,423  and  sales  amounting  to  $60,032,775. 

In  addition  to  these  distributive  societies  the  Union  comprises 
four  insurance  companies. 

Similar  success  has  been  achieved  by  the  Union's  Wholesale, 
which,  in  1913,  the  end  of  the  first  decade  of  its  existence,  had 
total  sales  of  $2,117,030.  In  1916  the  total  volume  of  sales  was 
$6,114,785,  while  in  1919  the  total  was  $19,208,230.  The  increase 
in  the  turnover  for  1919  was  147  per  cent  over  1918.  In  addition 
the  society  has  established  a  margarine  factory  at  Norrkoping,  at 
a  cost  of  $850,000,  with  a  productive  capacity  of  140,000  to 
160,000  pounds  per  day. 

5.  Switzerland.  Switzerland  has  long  since  been  noted  for 
her  cooperative  enterprises,  and  the  spirit  of  loyalty  to  her 
republican  institutions  has  been  reflected  in  these  voluntary 
associations  for  the  production  and  distribution  of  commodities. 
The  Union  of  Swiss  Consumers'  Societies  (Verbond  schweiz,  Kon- 
sumvereine)  comprises  about  four-fifths  of  the  distributive  co- 
operative membership  and  trade  of  the  country.  Statistics  of  the 
Union  show  that  in  1914  there  were  396  affiliated  societies  with 
a  collective  membership  of  276,431  and  total  sales  amounting  to 
$28,730,195.     In  1918  there  were  461  societies,  of  which  433 


70  COOPERATION 

reported  a  collective  membership  of  341,826  and  total  sales  of 
$47,519,155,  while  in  1919  there  were  476  societies,  of  which  443 
societies  reported  a  total  membership  of  353,811  and  a  collective 
turnover  of  $57,933,275. 

The  Union's  wholesale  operations  show  steady  development 
and  prosperity.  Total  sales  amounted  to  $9,143,415  in  1914, 
$19,237,200  in  1917,  and  $28,288,365  in  1919.  The  productive 
enterprises  of  the  wholesale  comprise  a  boot  and  shoe  factory, 
spice  mill,  coffee  roastery,  and  a  cabbage  pickling  establishment. 
In  1916  farming  and  general  agricultural  activities  were  started. 
In  addition,  the  movement  has  a  cooperative  dairy  at  Basle,  corn 
mills  at  Zurich  and  Vevey,  a  mutual  insurance  society,  a  coopera- 
tive society  for  the  supply  of  furniture,  and  a  cooperative  garden 
village  or  colony  (at  Freidorf)  for  the  housing  of  150  families 
included  among  the  Union's  employees. 

6.  Hungary.  The  reduction  of  Hungarian  territory  under 
the  terms  of  the  Peace  Treaty  at  the  close  of  the  "World  War, 
coupled  with  the  civil  strife  between  the  revolutionary  forces  of 
communism  and  the  protagonists  of  more  conservative  policies 
seem  not  to  have  retarded  the  growth  of  cooperation  in  Hungary. 
The  establishment  of  new  societies  and  the  consolidation  of  forces 
represented  by  the  amalgamation  of  the  Central  Organization  of 
Christian  Cooperative  Societies  with  the  ' '  Hangya ' '  or  Coopera- 
tive Wholesale  Society  of  the  Federation  of  Hungarian  Farmers, 
in  1918,  are  indicative  of  a  very  constructive  program  on  the 
part  of  Hungarian  cooperatives.  The  prosperity  of  distributive 
retail  associations  is  shown  by  the  fact  that  there  were  1,276 
societies  in  1914  having  a  collective  membership  of  190,555  and 
a  total  turnover  of  $15,413,810.  In  1917  there  were  1,707  soci- 
eties Avith  a  collective  membership  of  467,077  and  total  sales  of 
$37,971,095,  while  in  1918,  the  last  year  for  which  data  are  avail- 
able, there  were  2,140  societies,  a  total  membership  of  658,267, 
and  a  total  volume  of  trade  amounting  to  $51,604,175. 

The  ultra-abnormal  inflation  of  prices  is  unquestionably  a 
responsible  factor  in  the  tremendous  increase  in  the  value  of  sales, 
both  in  regard  to  wholesale  and  retail  operations.  The  wholesale 
operations  of  the  "Hangya"  in  1914  amounted  to  $6,295,605. 
The  value  of  total  turnover  in  1918  was  $26,411,485,  and  in  1919, 
$43,709,815.     The  capital  of  the  society  was  almost  doubled  in 


STUDY  IN   CONSTRUCTIVE  ECONOMIC   REFORM  71 

1919  over  1918,  and  new  establishments  were  opened.  In  addi- 
tion, there  are  a  dozen  productive  concerns  managed  by  the 
"Hangya,"  ten  of  which  in  1919  had  a  collective  capital  of 
over  $7,310,000. 

7.  Italy.  In  1913  there  was  in  Italy  one  member  of  a  co- 
operative society  to  every  twenty-three  inhabitants,  as  compared 
with  a  ratio  of  one  to  every  sixteen  in  Great  Britain,  and  one  to 
every  thirteen  in  Germany.^*'  The  cooperative  movement  in 
Italy  embraces  every  phase  of  cooperation,  including  cooperative 
trade  unions  of  builders,  navvies  and  day  laborers  who  "spe- 
cialize in  labor  contracts  for  the  erecting  of  public  buildings, 
road-making,  canals,  and  railways."  The  cost  of  construction 
by  cooperative  syndicates  is  reasonable  and  the  work  is  well 
done.^i 

In  the  period  subsequent  to  1914  the  cooperative  movement 
in  Italy  had  made  notable  progress.  It  is  estimated  that  Italy  now 
contains  about  10,000  cooperative  societies  of  all  classes.  In- 
formation collected  in  1920  by  the  National  League  of  Cooperative 
Societies  came  from  3,814  distributive  societies,  2,351  labor  syn- 
dicates and  productive  societies,  425  agricultural  societies,  425 
miscellaneous  organizations,  and  234  federations,  making  a  total 
of  7,249  societies  and  federations. 

Among  the  distributive  organizations  the  National  League  of 
Cooperative  Societies  (Lega  Nazionale  delle  Cooperative)  is  the 
most  prominent.  In  1914  it  comprised  2,182  affiliated  societies, 
or  about  90  per  cent  of  the  total,  and  at  the  end  of  1919  there 
were  2,923  societies.  The  Italian  Wholesale  had  a  turnover  of 
$282,000  in  1914,  and  $1,080,000  in  1917.  The  Italian  Coopera- 
tive Bank,  organized  in  1913,  is  an  important  reenforeement  of 
the  whole  cooperative  movement.  In  1918  the  Italian  Govern- 
ment decided  to  establish  government  cooperatives  that  are  now 
working  in  conjunction  with  local  societies  in  the  larger  cities. 

8.  France.  For  almost  a  century  various  kinds  of  coopera- 
tive enterprises  have  been  conducted  in  France,  and  just  before 
the  World  War  thousands  of  productive  and  distributive  societies 
were  doing  an  enormous  business.  In  1914  there  were  3,261 
cooperative  distributive  societies  with  a  collective  membership 

'"Agnes  D.  Warbasse,  op.  cit.,  p.  12. 


72  COOPERATION 

of  880,000  and  a  total  turnover  of  $64,200,000.  In  1919  there 
were  4,000  such  societies  with  a  total  membership  of  1,300,000 
and  a  collective  turnover  of  $200,000,000.  These  data  indicate 
approximate  increases  of  22  per  cent  in  the  number  of  societies, 
47  per  cent  in  membership,  and  211  per  cent  in  total  sales  during 
the  period. 

Fully  one  half  of  the  4,000  distributive  cooperative  societies 
in  France  are  represented  in  the  National  Federation  of  Con- 
sumers' Societies.  Eeports  from  1,196  of  these  show  a  total  mem- 
bership of  724,494,  while  1,080  of  them  reported  total  sales  of 
$88,764,040  in  1919.  Recently  the  Union  of  Cooperators  was 
formed  as  a  fusion  of  two  unions  in  the  region  of  Paris.  The 
Union  possesses  300  branches,  and  has  a  turnover  of  approxi- 
mately $14,000,000.  The  French  Wholesale  (Magasin  de  Gros), 
in  Paris,  has  at  least  nine  establishments  including  three  boot 
and  shoe  factories,  three  canned  goods  establishments,  and  a 
coffee  roastery,  and  has  had  remarkable  growth  in  recent  years. 
In  the  fiscal  years  1914-1915  and  1915-1916,  respectively,  the 
turnover  was  $1,800,000  and  $2,400,000.  Reports  of  the  Whole- 
sale's operations  show  that  in  the  fiscal  year  1917-1918  there  were 
670  societies  with  total  sales  of  $8,254,135;  in  1918-1919,  1,088 
societies  with  a  total  turnover  of  $15,723,235  ;  and  in  1919-1920, 
1,435  societies  with  a  total  volume  of  sales  amounting  to 
$30,401,785.  Moreover,  in  1919-1920  the  output  of  the  Whole- 
sale's productive  departments  was  valued  at  $2,517,035,  as  com- 
pared with  $1,363,620  in  1918-1919,  and  $759,510  in  1917-1918. 
The  wholesale  cooperative  movement  rendered  invaluable  service 
to  the  country  in  the  recent  war,  and  the  Government  entrusted 
many  problems  of  distribution  to  the  societies. 

9.  Ger77iany.  Unlike  France,  where  many  cooperative  estab- 
lishments were  destroyed  in  the  devastated  areas  of  war,  Germany 
suffered  practically  no  setback  in  the  cooperative  movement  ex- 
cept the  loss  of  societies  through  the  recent  political  readjust- 
ment of  frontiers.  The  Central  Union  of  German  Distributive 
Societies  (Zentralverbond  deutscher  Konsumvereine)  is  much 
stronger  today  than  at  any  other  time  in  its  career,  and  is  by  far 
the  most  powerful  organization  among  consumers'  movements 
west  of  Russia. 


STUDY  IN   CONSTRUCTIVE  ECONOMIC  REFORM  73 

In  1914  the  Union  had  1,109  societies,  of  which  1,094  re- 
ported a  total  membership  of  1,717,519  and  collective  sales  of 
$123,245,130.  The  data  for  1918  show  1,090  societies,  of  which 
1,078  reported  a  collective  membership  of  2,231,917,  and  total 
sales  of  $167,688,285,  while  in  1919,  1,132  societies  had  a 
total  membership  of  2,308,407  and  a  collective  turnover  of 
$268,895,315. 

The  German  Cooperative  Wholesale  (Grossein  kaufsgesell- 
schaft  deutscher  Konsumvereine)  is  a  prosperous  institution  both 
in  its  distributive  and  productive  departments.  Its  productive 
establishments  now  comprise  three  cigar  factories,  a  tobacco  fac- 
tory, a  match  works,  two  soap  works,  a  weaving  shed,  a  clothing 
factory,  a  box  factory,  a  sweetmeat  and  chocolate  establishment, 
a  mustard  works,  a  spice  mill,  a  brush  works,  a  wood  works,  etc. 
In  1914  the  distributive  department  had  a  turnover  of  $39,- 
381,010,  and  the  productive  department  a  turnover  of  $2,618,815. 
The  report  'for  1919  shows  a  turnover  of  $88,174,515  for  the 
former,  and  for  the  latter  $7,170,380.  In  Germany,  as  in  the 
other  countries,  especially  European,  the  increase  in  the  value  of 
annual  turnover  is  due  not  so  much  to  the  increased  volume  of 
commodities  produced  and  sold  as  to  the  unprecedented  inflation 
of  values. 

10.  Finland,  Estlionia,  Poland,  Georgia,  Yugo-Slavia,  and 
Ukraine.  Russia 's  neighbors,  like  Russia,  have  learned  the  value 
of  constructive  economic  effort  in  the  midst  of  political  and 
economic  disorganization.  Cooperation  has  appeared  as  a  ray 
of  hope  promising  to  bring  economic  stability  out  of  chaos  and 
disorder  for  the  struggling  Slavic  peoples.  A  glance  at  the  co- 
operative movements  in  these  countries  will  suffice  to  demon- 
strate the  potent  economic  influence  of  the  cooperative  ideal. 

The  General  Cooperative  Union  of  Finland  had  in  1914  about 
415  societies  with  a  collective  membership  of  97,000  and  a  total 
volume  of  sales  amounting  to  $14,200,000,  while  in  1919  there 
were  567  societies  with  an  aggregate  membership  of  201,307  and 
a  total  turnovier  of  $123,154,145.  During  the  same  period  the 
Finnish  Wholesale  Society  made  remarkable  progress  despite  the 
difficulties  incident  to  civil  war.  The  Wholesale  in  1914  had  244 
societies  and  a  turnover  of  $4,857,200,  and  in  1919  a  total  of 
503  societies  with  a  collective  turnover  of  $40,997,180.    Besides 


74  COOPERATION 

several  agricultural  estates,  the  wholesale  owns  a  match  factory, 
a  saw  mill,  a  brick  works,  a  tar  distillery,  a  cooperage,  a  coffee 
roasting  establishment,  and  a  fruit  packing  enterprise.  The 
value  of  the  total  output  of  these  productive  works  increased 
from  $135,545  in  1915,  to  $1,037,395  in  1919. 

The  Socialist  Societies  have  seceded  from  the  Central  Coopera- 
tive Union  (the  neutral  union)  and  have  formed  the  Central 
Union  of  Consumers'  Cooperative  Societies,  which  embraces  the 
minority  of  distributive  societies  in  Finland.  In  1919  the  Cen- 
tral Union  had  103  affiliated  societies  with  a  collective  member- 
ship of  123,817,  and  total  sales  of  about  $54,613,060.  The  Whole- 
sale had  91  affiliated  societies  with  a  total  membership  of  119,615 
and  total  sales  of  $10,829,720. 

The  Republic  of  Esthonia,  formerly  one  of  the  Russian  Baltic 
states,  possesses  140  cooperative  societies  with  a  total  member- 
ship of  16,000,  and  a  total  turnover  of  approximately  $2,500,000, 
according  to  the  data  for  1919.  The  Reval  Society  has  4,000 
members  and  an  annual  turnover  of  $1,000,000.  A  wholesale, 
which  was  established  in  1919  had  a  turnover  of  $1,000,000  for 
the  first  year. 

The  distributive  cooperative  movement  in  Poland  is  central- 
ized in  the  Warsaw  Union  of  Consumers '  Societies,  established  in 
1911.  The  Union,  like  similar  organizations  elsewhere,  combines 
the  necessary  operations  of  wholesale  business,  propaganda,  edu- 
cation, and  protection.  The  Union's  recent  growth  is  shown  by 
the  fact  that  in  1917  there  were  327  affiliated  societies  with  a 
total  membership  of  40,553,  of  which  308  societies  reported  a 
collective  turnover  of  $9,927,030,  while  in  1919  there  were  628 
societies  with  a  combined  membership  of  186,824,  of  which  412 
reported  a  collective  volume  of  sales  valued  at  $51,321,690.  The 
wholesale  operations  have  also  sho^vn  remarkable  progress.  In 
1913  there  were  274  affiliated  societies  with  a  total  membership  of 
36,909,  and  a  turnover  of  $1,040,455,  while  in  1919  there  were 
628  societies  affiliated  with  the  wholesale  and  the  total  volume 
of  sales  equalled  $36,361,020.  In  addition  to  its  affiliated  soci- 
eties the  Union  has  trading  relations  with  over  1,000  non-affiliated 
associations.  In  1918-1919  seven  new  branch  warehouses  were 
opened  for  business,  making  a  total  of  sixteen  now  operating  in 
the  chief  centers  of  the  Republic  of  Poland. 


STUDY  IN  CONSTRUCTIVE  ECONOMIC  REFORM  75 

Georgia,  Transcaucasia,  formerly  one  of  the  subject  states  of 
the  Russian  Empire  but  now  an  independent  republic,  has  had  a 
successful  distributive  cooperative  movement  since  1907.  In  1916 
the  first  Central  Cooperative  Union  was  established  at  Tiflis, 
comprising  174  affiliated  societies.  In  that  year  the  collective 
membership  was  66,605,  but  this  increased  to  260,612  in  1917  and 
464,845  in  1918,  while  the  number  of  societies  was  518  in  1917 
and  880  in  1918.  Collective  sales  amounted  to  $29,178,800  in 
]917  and  to  $110,787,117  in  1918,  an  increase  of  about  200  per 
cent.  It  is  estimated  that  the  membership  of  distributive  coopera- 
tive societies  in  Georgia  (calculated  on  the  basis  of  families  repre- 
sented) constitutes  about  74  per  cent  of  the  total  population  of 
2,500,000. 

The  youthful  Republic  of  Ukraine  (in  South  Russia)  has  over 
18,000  cooperative  societies,  including  distributive,  credit,  and 
agricultural  associations,  each  of  which  has  its  separate  national 
union  fusing  the  district  federations  of  local  societies.  The 
Dnipro  Union  embraces  the  district  federations  of  consumers' 
societies  and  its  aim  is  to  bring  within  its  supervision  all  of  the 
4,000  or  5,000  distributive  societies  in  Ukraine. 

Another  new  state — Yugo-Slavia  or  the  Kingdom  of  the 
Serbs,  Croats,  and  Slovenes — founded  in  1919  a  comprehensive 
organization  known  as  the  General  Cooperative  Federation  of  the 
Kingdom  of  the  Serbs,  Croats,  and  Slovenes,  consisting  of  11 
cooperative  unions  with  a  total  of  3,800  cooperative  societies  with 
nearly  a  half  million  members. 

11.  Russia.  There  are  in  Russia  three  general  types  of  co- 
operative associations,  namely,  consumers'  societies,  producers' 
societies,  and  credit  societies,  each  with  a  varied  history  of 
alternative  encouragement  and  obstruction  first  under  the  czarist 
regime  and  later  under  the  proletarian  dictatorship  of  the  Bolshe- 
veki.  These  societies  have  surmounted  all  barriers  of  this  kind 
and  have  developed  from  modest  buying  and  selling  groups  until 
at  present ' '  they  extend  into  almost  every  phase  of  Russian  rural 
life,  which  is  87  per  cent  of  the  whole,  and  include  in  their  scope 
production,  transportation,  distribution,  banking  and  credit,  and 
foreign  trade.  "^^ 

*=Fre(Ieric  E,  Lee,  The  Russian  Cooperative  Movenwnt,  U.  S.  Depart- 
ment of  Commerce  Publications,  Miscellaneous  Series  No.  101,  p.  10. 


76  COOPERATION 

The  origin  of  Russian  cooperation  dates  back  to  1865,  when 
the  Government  approved  the  first  consumers'  society.  Credit 
associations  formed  a  union  in  1901,  were  encouraged  by  legisla- 
tion in  1905  which  gave  the  Zemstvos  power  to  open  such  insti- 
tutions on  their  own  authority,  and  by  a  new  statute  in  1911 
which  gave  them  banking  privileges.  The  Moscow  Narodny 
(People's)  Bank,  founded  in  1912,  is  the  great  financial  institu- 
tion of  the  cooperatives.  Between  1900  and  1905  agricultural 
cooperative  associations  commenced  and  have  assumed  an  im- 
portant position  in  Russian  life. 

In  1918  the  Russian  cooperative  unions  had  20,000,000  indi- 
vidual members  (heads  of  families)  and  comprised  S0,000  local 
societies  and  500  local  unions.  On  the  basis  of  five  to  a  family 
this  means  that  cooperative  organizations  represented  100,000,000 
of  the  Russian  population.  The  capital  was  230,000,000  rubles, 
or  $117,300,000,  if  reckoned  at  par,  the  number  of  industrial 
plants  owaied  by  the  unions  numbered  5,000,  and  the  number  of 
employees  50,000.  Of  80,000  societies  on  January  1,  1919,  26,500 
were  credit  and  loan  savings  associations;  40,000  were  con- 
sumers' societies;  8,500  were  agricultural  societies;  while  5,000 
were  peasant  groups  or  artels  for  making  butter,  etc.^^  Much 
promise  for  Russian  cooperation  is  found  in  the  growth  of  re- 
gional unions  of  societies  and  the  affiliation  of  these  with  the  All- 
Russian  Central  Union  of  Consumers'  Societies,  the  "Centro- 
soyus,"  whose  total  turnover  at  the  end  of  1918  was  approxi- 
mately $500,000,000,  and  the  value  of  whose  productive  output 
was  about  $75,000,000.^'^  The  incorporation  of  the  cooperative 
system  into  the  Soviet  State  organization  is  a  step  which  has  been 
bitterly  opposed  by  cooperators.  Whatever  else  one  might  say  in 
eulogy  of  the  Russian  cooperative  movement,  it  is  unquestionably 
the  brightest  ray  of  hope  in  Russia 's  economic  and  political  dis- 
ruption. 

12.  CaTuida.  In  Canada,  as  in  the  United  States,  cooperation 
has  never  enjoyed  so  auspicious  a  career  as  have  the  movements 
in  Britain  and  Europe.  The  Canadian  movement  began  in  1861, 
seventeen  years  after  the  opening  of  the  store  of  the  Rochdale 
pioneers,  by  English  and  Scottish  immigrants.     The  first  store 

'UUd.,  p.  12. 

^The  People's  Year  BooTc  (British)  1921,  p.  347. 


STUDY  IN   CONSTRUCTIVE  ECONOMIC   REFORM  77 

was  the  Union  Association  of  Stellarton,  Nova  Scotia.  Under 
the  able  direction  of  James  Mitchell,  who  was  connected  with 
the  society  for  fifty-three  years,  the  store  has  been  successful. 
The  association  was  begun  with  30  members  and  a  capital  of 
$1,000,  while  in  1914,  when  Mr.  Mitchell  retired,  there  was  a 
membership  of  202,  a  capital  of  $16,145,  a  turnover  of  $41,275, 
and  a  trading  surplus  for  the  year  of  $4,160.  During  the  soci- 
ety's long  career  the  dividend  has  been  between  three  and  twelve 
per  cent.  Of  ten  other  cooperative  stores  establishd  in  Nova 
Scotia  during  the  last  forty  years  of  the  nineteenth  century, 
only  one  survived. 

A  conference  of  Canadian  cooperative  societies  which  was 
held  at  Hamilton,  Ontario,  March  6,  1909,  organized  the  Co- 
operative Union  of  Canada.  At  the  end  of  1919  there  were  21 
societies  affiliated  with  the  Union.  Of  sixteen  societies  from 
which  reports  were  received,  eleven  are  industrial,  four  are  agri- 
cultural distributive  societies,  and  one  an  agricultural  marketing 
and  distributive  society.  Statistics  of  the  fifteen  distributive 
societies  showed  that  in  1919  the  aggregate  trade  turnover  had 
been  increased  from  $644,185  to  $2,347,725 ;  share  and  loan 
capital  from  $49,700  to  $212,060 ;  loan  deposits  from  $9,765  to 
$148,775 ;  reserve  funds  from  $9,205  to  $47,465 ;  and  net  trade 
surplus  from  $33,510  to  $156,870.  There  was  a  collective  mem- 
bership of  6,306,  an  increase  of  1,560  over  the  previous  year.  The 
United  Grain  Growers,  Ltd.,  had  in  1914,  34,503  members,  share 
and  investment  capital  of  $2,415,185,  a  reserve  fund  of  $1,756,- 
430,  and  a  net  trading  surplus  of  $148,550.  During  the  year  the 
society  handled  5,257  cars  of  livestock,  22,203,007  bushels  of 
grain,  and  did  a  distributive  business  of  $6,180,360. 

Throughout  Canada  hundreds  of  other  retail  societies,  pat- 
terned somewhat  after  the  Rochdale  plan,  are  functioning.  In 
1917  there  were  304  agricultural  cooperative  societies  in 
Saskatchewan,  with  a  membership  of  12,459,  a  paid  up  capital  of 
$151,805,  a  turnover  of  $3,076,465,  and  a  trading  surplus  of 
$110,920.  There  are  65  incorporated  agricultural  cooperative 
societies  in  Alberta,  and  9  in  Manitoba,  while  in  British  Columbia 
13  retail  societies  have  be«n  organized.  One  of  the  most  inter- 
esting phases  of  cooperation  in  Canada  is  the  credit  bank  system 
in  Quebec  province  and  French-speaking  districts  of  Ontario. 


78  COOPERATION 

The  first  bank  was  established  by  Mr,  Alphonse  Desjardins  at 
Levis,  P.  Q.,  in  1900.  Since  then  167  such  parish  banks  have 
been  established  in  Quebec  alone,  with  an  aggregate  membership 
of  60,000  and  assets  of  over  $10,000,000,  while  the  annual  turn- 
over is  $30,000,000.  An  average  of  18,000  loans,  totalling  several 
million  dollars,  are  made  annually. 

Conclusion 

No  one  can  study  the  cooperative  movement  in  Europe,  even 
in  the  light  which  the  present  brief  outline  throws  upon  that 
subject,  without  recognizing  the  grasp  which  the  cooperative 
ideal  has  upon  the  minds  of  the  polyglot  peoples  of  the  Old 
World.  The  recent  phenomenal  growth  of  the  movement  in  coun- 
tries whose  political,  social  and  economic  structure  has  been 
shaken  to  its  very  foundation,  if  indeed  the  very  foundation 
itself  has  not  been  destroyed  as  in  Russia,  is  striking  evidence  of 
the  practical  possibility  of  the  fundamental  principles  of  coopera- 
tion. Of  one  thing  we  may  be  assured,  namely,  that  the  coopera- 
tive movement  has  become  a  permanent  phase  of  the  economic 
life  of  Europe.  A  second  fact  of  no  less  significance  is  that 
cooperation  stands  supreme  among  the  movements  that  seek 
economic  reform  and  readjustment  in  a  peaceful,  evolutionary, 
and  constructive  manner.  The  immediate  program  of  coopera- 
tion— the  elimination  of  the  middleman — has  been  achieved  on 
an  unexpected  scale.  Whether,  out  of  the  political  and  economic 
chaos  of  Europe,  the  cooperators'  ideal  commonwealth,  founded 
on  mutual  aid  and  functioning  in  the  interest  of  all,  will  ulti- 
mately emerge,  is  a  question  which  only  time  can  answer.  At 
present  there  appears  to  be  little  ground  for  thinking  that  this 
ultimate  program  of  cooperation  will  be  realized  in  the  immediate 
future. 

When  we  turn  to  the  United  States  and  Canada,  in  which 
conditions  of  life  are  quite  similar,  we  find  cooperation  holding  a 
relatively  inconspicuous  position  in  economic  life.  The  achieve- 
ments of  the  movement  in  these  countries  in  recent  years  give 
some  promise  of  greater  stability  and  continuity,  but  it  cannot 
yet  be  said  that  cooperation  has  become  a  very  potent  factor  in 
their  productive  and  distributive  systems.  It  may  not  be  that 
the  present  period  of  unemployment  and  price  recession  will 


STUDY  IN   CONSTRUCTIVE  ECONOMIC  REFORM  79 

result  in  an  ebbing  of  the  tide  of  cooperative  effort,  but  for  a  long 
period  to  come  cooperation  will  attain  no  such  prominence  in  the 
United  States  and  Canada  as  it  has  achieved  in  the  Old  World. 
There  is  every  reason  to  believe,  however,  that  the  movement  in 
these  countries  will  experience  a  steady  growth. 

What  has  just  been  said  suggests  the  inquiry  as  to  the  reasons 
why  cooperation  has  developed  so  tardily  and  achieved  so  little 
success  and  permanence  in  North  America.  Generally  speaking, 
there  has  been  a  higher  degree  of  individual  comfort  here  than 
in  Europe,  which  has  made  people  less  cognizant  of  the  need  for 
small  economies  and  so  has  retarded  the  expression  of  the  asso- 
ciative spirit  and  the  development  of  cooperative  action  in  pro- 
duction and  distribution  of  commodities.  In  new  countries,  as 
the  United  States  and  Canada,  the  abundance  of  economic  re- 
sources and  the  prevailing  opportunity  for  economic  prosperity 
have  developed  a  spirit  of  individualism  and  competitive  achieve- 
ment. There  has  been  neither  the  economic  necessity  nor  the 
individual  inclination  to  develop  a  system  of  cooperative  enter- 
prises. As  free  access  to  the  soil  and  the  open  door  to  in- 
dividual enterprise  are  closed  to  the  masses  of  our  people,  we 
shall  doubtless  have  a  greater  measure  of  cooperative  effort  in 
production  and  distribution.  In  regard  to  the  acquisition  of 
land  we  are  rapidly  reaching  that  status,  and  the  growth  of 
corporate  organizations  and  industrial  consolidations  indicate  a 
narrowing  of  the  field  of  individual  enterprise,  but  for  a  long 
time  to  come  America  will,  in  all  probability,  continue  to  reward 
so  generously  individual  enterprise  and  initiative  that  the  co- 
operative movement  will  have  difficulty  in  enlisting  leaders  and 
managers  with  business  acumen  and  ingenuity. 

■Careful  examination  of  cooperative  associations  in  America 
reveals  the  following  specific  reasons  for  their  slow  development 
and  frequent  failure  on  this  side  of  the  Atlantic : 

1.  Geographic  isolation  of  individual  societies,  which  has  pre- 
vented the  development  of  solidarity  of  interest  and  pro- 
tective measures. 

2.  Isolated  societies  have  been  organized  frequently  by  people 
wholly  ignorant  of  essential  principles  of  business  organi- 
zation and  inexperienced  in  sound  policies  of  business 
administration  and  operation. 


80  COOPERATION 

3.  The  absence  of  a  spirit  of  thrift  among  the  common  people 
which  precluded  the  appeal  of  small  economies  in  pur- 
chasing. 

4.  The  polyglot  or  heterogeneous  character  of  the  population 
which  has  made  cooperative  effort  difficult.  National  and 
racial  prejudices  have  destroyed  the  good-will  so  essential 
to  successful  cooperation,  consequently  much  of  our  pros- 
perous cooperation  is  found  among  distinct  racial  and  na- 
tional groups,  such  as  the  Finns,  the  Russians,  the  Ger- 
mans, and  the  Jews. 

5.  Unscrupulous  managers  who,  lacking  true  loyalty  to  the 
cooperative  ideal,  have  either  administered  the  stores  for 
selfish  purposes  or  conducted  the  business  carelessly  and 
inefficiently. 

6.  The  excessive  extension  of  credit  on  sales,  a  serious  de- 
parture from  pure  Rochdalism,  has  resulted  in  the  accumu- 
lation of  bad  debts  and  bankruptcy. 

7.  The  unwise  practice  of  attempting  to  sell  commodities  at 
cost  rather  than  at  standard  or  prevailing  prices. 

8.  The  strong  competition  of  immense  chain-stores,  depart- 
ment stores,  and  mail-order  houses,  capitalized  at  millions  of 
dollars,  and  frequently  able  to  undercut  prices  in  order  to 
lead  customers  from  the  small  enterprise.  The  presence  of 
"Kash  and  Karry, "  "Atlantic  and  Pacific,"  "Piggly 
Wiggly, "  and  other  self-service  stores,  together  with  Sears 
Roebuck,  Montgomery  Ward,  and  other  mail-order  com- 
panies offers  stiff  competition  to  the  cooperatives. 

9.  The  unrelenting  opposition  of  private  retailers  and  whole- 
salers who  bend  every  effort  to  crush  the  cooperative  enter- 
prises. 

10.  The  degeneration  of  cooperative  movements  into  aggressive 
labor  organizations,  placing  more  faith  in  strikes  and  boy- 
cotts and  collective  bargaining  than  in  cooperative  business 
ventures. 

11.  The  mobility  of  American  wage-earners,  a  frequent  migra- 
tion of  the  population  either  from  one  section  of  the  country 
to  another  or  to  and  from  the  mother  countries,  is  not 


STUDY  IN   CONSTRUCTIVE  ECONOMIC   REFORM  81 

conducive  to  permanent  interest  in  a  cooperative  society 
in  a  particular  place. 

12.  The  lack  of  a  unified  policy  and  the  failure  to  centralize 
administration  of  educational  and  publicity  work.  A  be- 
ginning has  now  been  made  in  this  regard  by  the  organiza- 
tion of  the  National  Cooperative  League  of  America,  with 
headquarters  in  New  York. 

13.  The  absence  of  adequate  cooperative  wholesale  facilities,  a 
difficulty  which  is  rapidly  being  eliminated  through  the 
new  movement  for  cooperative  wholesale  societies,  already 
discussed  in  this  study. 

The  advantages  accruing  to  the  working  classes  from  coopera- 
tive enterprise  are  many.  Aside  from  the  monetary  benefits  de- 
rived, cooperation  acquaints  its  supporters  with  the  practical 
methods  and  policies  of  business  administration,  develops  an 
awakened  and  intelligent  interest  in  the  political  and  economic 
life  of  the  nation,  promotes  the  spirit  of  mutual  social  service  and 
altruism,  and  creates  a  financial  reserve  and  an  economic  organi- 
zation which  are  always  beneficial  to  the  laborers  in  periods  of 
unemployment  and  industrial  depression.  For  these  reasons  the 
ideal  of  cooperation  will  never  be  totally  absent  from  the  minds 
of  wage-earning  groups.  Nor  is  it  desirable  that  such  an  ideal 
should  be  absent  from  the  minds  of  our  citizens.  In  these  days 
when  forces  of  readjustment  seem  to  degenerate  easily  into  revo- 
lutionary agencies,  the  wisdom  of  encouraging  peaceful,  con- 
structive business  ventures  owned  and  operated  by  wage-earners 
and  salaried  groups  cannot  be  overestimated. 


BIBLIOGRAPHY 

AcLAND,  A.  H.  D.,  and  Jones,  B.,  Workingmen  Cooperators:    what  they 

have  done  and  what  they  are  doing.     Manchester,  1898. 
Adams  &  Sxjmnee,  Labor  Problems.     Ninth  Edition,  New  York,  1919. 
AvES,  Ernest,  Cooperative  Industry.     London,  1907. 
Bemis,  Edward  W.,  Cooperation  in  New  England.     Baltimore,  1888. 
Blondford,  Thomas,  Cooperative  Workshops  in  Great  Britain.    London, 

1896. 
BUBNOV,  I.  v.,  The  Cooperative  Movement  in  Bussia:  its  history,  significam;e 

and  character.     Manchester,  1917. 
Cooperative  Wholesale  Society,  Annual  of,  1883-1918.     (Absorbed  by 

The  People's  Year  Book  since  1919), 
Fat,  Charles  R.,  Cooperation  at  Home  and  Abroad.     New  York,  1908. 

Copartnership  in  Industry.     New  York,  1913. 

FoED,  James,  Cooperation  in  New  England,  Urban  and  Bural.  New  York, 
1913. 

GiDE,  Charles,  Les  Societes  Cooperatives  de  Consommation.     Paris,  1910. 

Great  Britain,  Board  of  Trade  (Labor  Department),  Eeport  on  Work- 
men's Cooperative  Societies  in  the  United  Kingdom.     London,  1901. 

Beport  on  Industrial  and  Agricultural  Cooperative  Societies  in 

the  United  Kingdom.     London,  1912. 

Ministry  of  Labor  (Intelligence  and  Statistics  Department),  Be- 


port on  Profit-Sharing  and  Labor  Copartnership  in  the  United  Kingdom, 

London,  1920. 
Haggard,  D.  R.     Bural  Denmark  and  Its  Lessons.    London,  1913. 
Harris,  Bmerson  P.,  Cooperation :    the  hope  of  the  consumer.     New  York, 

1919. 
Holyoake,  George  Jacob,  The  Cooperative  Movement  Today.  London,  1891. 

Johns  Hopkins  University,  (Studies  in  Historical  and  Political  Science), 
History  of  Cooperation  in  the  United  States.     Baltimore,  1888. 

Lee,  Frederic  E.,  The  Bussian  Cooperative  Movement.  Publications  of  the 
United  States  Department  of  Commerce,  Bureau  of  Foreign  and  Do- 
mestic Commerce,  Miscellaneous  Series  No.  101.     Washington,  1920. 

LiNDECKE,  Otto,  Bos  Genossenschaftswessen  in  Deutschland,     Leipzig,  1908. 

Lloyd,  Henry  D.,  Labor  Copartnership.     New  York,  1899. 
Michell,  Humpfrey,  Profit-Sharing  and  Producers'  Cooperation  in  Canada. 
Kingston,  1918. 

82 


BIBLIOGRAPHY  83 

People's  Year  Book,  The,  Manchester,  1919,  1920,  1921. 

Eeport  of  the  Proceedings  of  the  First  American  Cooperative  Ck)nvention, 
Springfield,  Illinois,  1918. 

EiCHTER,  EugeNj  Cooperative  Stores;  their  history,  organization,  and  man- 
agement.    New  York,  1867. 

Shaw,  Albert,  Cooperation  in  the  Northwest.     Baltimore,  1888. 

Shinn,  Charles  H.,  Cooperation  on  the  Pacific  Coast.    Baltimore,  1888. 

Smith-GtORDON,  L.  E.  p.,  and  Staples,  L.  C,  Rural  Beconstructvon  in  Ire- 
land;   a  record  of  cooperative  organization.    New  Haven,  1919. 

SoNNicHSEN,  Albert,  Consumers'  Cooperation.     New  York,  1919. 

United  States  Department  of  Labor,  Bureau  of  Labor  Statistics, 
Monthly  Labor  Review,  Vols.  VIII,  IX,  X.  Washingtoii,  1918,  1919, 
1920. 

Warner,  Amos  G.,  Three  Phases  of  Cooperation  in  the  West.  Baltimore, 
1887. 

Webb,  Beatrice,  The  Cooperative  Movement  in  Britain.     London,  1893. 

Webb,  Catherine,  Industrial  Cooperation:  the  story  of  a  peaceful  revolu- 
tion.    Manchester,  1904. 

Williams,  Aneurin,  Copartnership  and  Profit-Sharing.     New  York,  1913. 

Wolff,  Henry  W.,  People's  Banks:  a  record  of  social  and  economic  s^ic- 
cess.     London,  1893. 

A  Cooperative  Credit  Bank  Handbook.     London,  1909. 

Cooperative  Credit  for  the  United  States.     New  York,  1917. 

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PAMPHLETS 
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INDEX 


American  Protective  Union,  38 
American  Rochdale  Plan,  52 
American  Society  of  Equity,  41 
Austria,  Cooperation  in,  65,  66 

Belgium,  Cooperation  in,  66,  67 
Belgian  refugees,  29 
Bloomington   Cooperative    Society, 

47 
Boston,  37 

California  Fruit  Growers'  Ex- 
change, 43 

Canada,  Cooperation  in,  76-78 

Central  States  Cooperative  Whole- 
sale Society,  44,  47,  51,  52,  61-65 

Chicago,  Cooperative  movement  in, 
44 

Cincinnati,  37 

Communistic  communities,  17,  37 

Congress,  Cooperative,  18 

Consumers '  Cooperative  Societies, 
43 

Cooperation,  definition  of,  5;  con- 
ditions of,  6;   forms  of,  7,  8 

Cooperative  agricultural  associa- 
tions, 10,  42 

Cooperative  banking,  32-34 

Cooperative  Central  Exchange,  50, 
53,  57-60 

Cooperative  employment,  34,  35 

Cooperative  League  of  America, 
50,  52 

Cooperative  production,  31 

Cooperative  productive  societies, 
24 

Cooperative  retail  distributive  so- 
cieties, 22,  23 

Cooperative  Society  of  America, 
45,  46 

Cooperative  supply  associations,  25 

Cooperative  Union,  18,  19,  21 


Cooperative  wholesale  societies,  25, 

50,  51 
Cooperative  Wholesale   Society   of 

America,  51,  53,  56,  57 
Cordwainers,  37 
Czecho-Slovakia,     Cooperation     in, 

67,  68 

De  Bernardi,  39 
Democratic  control,  8,  9 
Denmark,  Cooperation  in,  68 

Employment  policy  of  cooperators, 
35,  36 

English  Cooperative  Wholesale  So- 
ciety, 15-17,  19,  20,  25,  28 

English  Cooperative  W^oman  's 
Guild,  20 

Esthonia,  Cooperation  in,  74 

Farmers'  distributive  cooperation, 

41 
Farmers'  Educational  Cooperative 

Union,  41 
Farmers'   State  Exchange  of  Ne- 

braslca,  42 
Finland,  Cooperation  in,  73,  74 
Finnish  cooperators,  49,  50 
Finnish  Socialist  Party,  49 
France,  Cooperation  in,  71,  72 

Georgia,  Cooperation  in,  75 
Germany,  Cooperation  in,  72,  73 
Glasgow,  16 

Holyoake,  13 

Hungary,  Cooperation  in,  70,  71 

Illinois,  Cooperative  movement  in, 

44,   49 
Industrial  and  Provident  Societies 

Act,  11,  15 


84 


INDEX 


85 


International  Cooperative  Alliance, 
19 

International  Industrial  Assembly 
of  America,  38 

Irish  Agricultural  Wholesale  So- 
ciety, 19,  25,  30,  31 

Irish  Cooperative  Woman's  Guild, 

20 
Italy,  Cooperation  in,  71 

Kansas  Cooperative  Union,  41 
Knights  of  Labor,  39 

Labor  Exchange,  39 

Manchester,  13 

Michigan  cooperative  societies,  43 

Ministry  of  Food,  26 

Ministry  of  Labor,  35 

National  Agricultural  Organization 

Society,  41 
National  Conference  on  Marketing 

and  Farm  Credits,  41 
National     Cooperative     Wholesale 

Society,  54 
National  Council  of  Farmers'  As- 
sociations, 41 
National  Grange,  41 
National  Labor  Union,  38 
New  England  Association   of  Me- 
chanics and  Workingmen,  38 
New  Lenark,  12,  17 
Norway,  Cooperation  in,  68 

Owen,  Eobert,  11,  12,  17 


Pacific  Cooperative  League,  53-56 
Patrons  of  Industry,  38,  39 
Pennsylvania,  Cooperation  in,  44 
Philadelphia,  37 
Poland,  Cooperation  in,  74 
Price  inflation,  20 

Eight  Relationship  League,  40 
Eochdale,  10,  13,  14,  52 
Russia,  Cooperation  in,  75,  76 

Scottish  Cooperative  Wholesale  So- 
ciety, 17,  18,  20,  25,  28-30 

Scottish  Cooperative  Woman 's 
Guild,  20 

Shares,  Conditions  of,  9,  10 

Sovereigns  of  Industry,  39 

Swansea,  21 

Sweden,  Cooperation  in,  68,  69 

Switzerland,  Cooperation  in,  69,  70 

Tri-State  Cooperative  Society,  53, 
60,  61 

Ukraine,  Cooperation  in,  75 
United  Kingdom,  8,  9,  11,  22,  24 
United  States,  Cooperation  in,  36- 

65,  78-81 
Utopias,  11 

Welsh  cooperative  societies,  22 

Workingmen 's  cooperative  socie- 
ties, characteristics  of,  8-11 

Workingmen 's  Protective  Union, 
38 

World  War,  5,  26 

Yugo-Slavia,  Cooperation  in,  75 


s 

4 


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